As Prime minister Li Keqiang proposed in the government s work report that he would withdraw more than 150 million tons of coal production capacity in 2017, a new round of coal production capacity challenges was officially opened.

The industry believes that although the number of off-capacity tasks in 2017 is less than in 2016, it is more difficult than last year due to the fact that most of the off-production capacity this year is on-production capacity. At the same time, personnel placement will become the biggest problem in the process of capacity removal this year.

On March 7, the NDRC stated that the relevant departments are demonstrating the policy plan after the end of the heating season. In 2017, there is no need to implement large-scale coal mine reduction production measures.

A new round of coal production capacity to fight hard

Although the peak period of coal use is coming to an end after the Spring Festival, coal prices have gone from normal to negative, and there have been many rises in coal prices.

The latest issue of the Bohai Rim Thermal Coal Price Index closed at 589 yuan per ton, which was 2 yuan per ton higher than the previous month, and it rose for the first time since November 9, 2016.

According to relevant dispatch data, between January and February, the country s thermal power generation increased by 8.1 % year-on-year, and hydropower generation decreased by 10.7 % year-on-year, resulting in a large increase in coal consumption.

From the supply point of view, due to the lack of resumption of production after part of the Spring Festival holiday coal mine festival and the local strengthening of coal mine safety production inspections, there are more suspended production of coal mines, which has restricted the recovery of coal production. In addition, the industry s production capacity policy expectations also have a certain impact on the direction of coal prices.

In 2017, a new round of coal production capacity has entered a stage of difficulties.

It is understood that the task of eliminating production capacity in the coal industry in 2016 was 250 million tons, and finally the coal production capacity of Renwuwancheng was 290 million tons, which exceeded the task. However, most of the 290 million tons of production capacity removed in 2016 will be discontinued or semi-discontinued, which is relatively easy.

Recently, Prime minister Li Keqiang pointed out in the government s work report that in 2017, it will withdraw more than 150 million tons of coal production capacity. We will effectively deal with "zombie enterprises" and promote the merger and reorganization of enterprises and the liquidation of bankruptcy, resolutely eliminate outdated production capacity that is not up to standard, and strictly control the production capacity of surplus industries.

The government report also pointed out that workers must be placed in production capacity, the central government special awards and supplementary funds must be allocated in a timely manner, and local and enterprises must implement relevant funds and measures to ensure that there is a way out for the employment of employees and that their lives are guaranteed.

A number of coal industry insiders told the "Securities Daily" reporter that although the number of decapacity tasks in 2017 is reduced in terms of numbers, it is more difficult than last year, mainly because most of the production capacity this year is in production capacity.

In addition, after last year s round of capacity removal, personnel resettlement enterprises have less and less room for internal digestion, and personnel resettlement will also become this year s production capacity difficulties.

Coal production restriction plan will not be implemented on a large scale

Remarkably, this follows the submission to the NDRC of plans by big coal companies such as shenhua and China coal to continue the policy of curtailing production for 276 working days this year, which the CDC has also called for discussion.

Coal prices, which benefited from last year s coal restrictions, have improved dramatically. After the end of the heating season, coal demand decreased and coal companies feared that coal prices would fall again, so they hoped to implement a coal production limit plan.

In this regard, the NDRC said that from the current situation, with the deepening of coal production capacity, a number of ineffective and inefficient production capacity accelerated to withdraw, coal mine illegal construction and super power production have been strongly contained, and the relationship between supply and demand in the coal market has been significantly improved. In 2017, there is no need to implement large-scale coal mine reduction production measures.

"At present, the relevant departments are demonstrating the policy plan after the end of the heating season. The relevant figures of the NDRC also stated that the basic consideration is that in principle, coal mines with advanced production capacity and coal mines producing special shortages of coal will not implement reduced production measures; In areas where the amount of coal transferred is large and the pressure on the succession of resources after capacity has been removed, the provincial governments at the place where it is located shall determine whether or not to implement reduced-volume production measures, and the state shall not make hard requirements. Whether or not non-advanced production capacity in other regions will be implemented and how to implement measures to reduce production volume will be considered by the relevant departments according to the conditions of the coal market, taking into account factors such as the region of supply and demand of coal, distribution, transportation, variety and seasonal demand. When coal prices are still above the reasonable range(that is, the green range that is clear to curb abnormal fluctuations in coal prices), there will be no reduction in production measures.

It should be mentioned that at the beginning of this year, the NDRC and other four departments jointly issued the "Circular on Combating Unusual Price Volatility in the Coal Market" stating that in 2017, for example, when the price of thermal coal is in a green area(500 yuan-570 yuan/ton), We should give full play to the role of market regulation and refrain from taking regulatory measures.

The integrated futures coal researcher told the Securities Daily that this means that the country wants to maintain the price of coal at 500 yuan / ton -570 yuan / ton, and that if it is too high or too low, relevant measures may be taken. (Source: China Economic Network)