China’s appetite for coal, once seemingly unlimited, is starting to wane, and the effects are rippling far from the Middle Kingdom.
wane：衰落，退潮，衰减 ripple：波纹，涟漪
With the world’s second-largest economy, China in recent years has been driving demand for all sorts of commodities, especially thermal coal, which is used to fuel power plants. But now economic growth in China is slowing, and rising public anger over air pollution is increasing pressure on utilities running the country’s coal-burning power plants to shift to nuclear power and natural gas.
thermal coal：热能煤
China was supposed to have been the sector’s savior. Market watchers in recent years have based expectations of rising thermal-coal prices–which have plunged from their 2008 peaks–on robust growth in China and a global economic recovery.
plunge：投入，陷入，跌进
But Premier Li Keqiang has set a 7.5% growth target for China’s economy this year, the slowest rate since 1990. And Beijing says it wants to reduce industry’s so-called energy intensity–or the amount of energy used per unit of economic output–while shifting to cleaner fuels. The government is planning the biggest rollout of new nuclear reactors in the world, further undermining demand for thermal coal.
rollout：首次展示，滑跑
Weakening demand from China–the largest consumer of coal in the world–comes at a bad time for international producers, who are already suffering from a crippling oversupply in the market. Producers of thermal coal are scaling back plans, particularly in Australia, which is second only to Indonesia in thermal coal exports. A proposal to double capacity at Newcastle port, the world’s largest coal export facility, has been shelved. Analysts predict that many new mines may become unviable, and that the most expensive existing mines will be forced to cut back or close.
crippling：削弱，造成严重后果的 shelve：搁置，倾斜
Smaller Australian miners will find it increasingly difficult to finance projects, while large, diversified resources companies are likely to shift their focus toward more attractive commodities. BHP Billiton Ltd., BHP.AU -0.79% for one, has ruled out further expansion of its coal-mining business.
Global coal consumption could grow as little as 2% a year through 2017 in the face of weakening Chinese demand, according to the International Energy Agency’s most recent coal-market report. Long-term estimates for Chinese coal demand, for the year 2035, range from 3.66 billion tons of coal equivalent, up from 2.29 billion tons in 2010, to as low as 1.51 billion tons, depending on Beijing’s environmental policies.
Further darkening the picture for international producers, most of the coal that Chinese utilities are likely to buy in the future will be local. That’s because the country sits on trillions of tons of coal reserves, so domestic mines should meet most of China’s demand for thermal coal as long as prices remain low and transportation costs affordable, says a Beijing-based coal trader who declined to be named. As a result, UBS expects Chinese coal imports to decline steadily.
Australian thermal coal destined for Asia currently is near its lowest price since 2009. Commonwealth Bank of Australia CBA.AU -0.07% analyst Lachlan Shaw sees prices rising but recently cut his coal-price forecast 2% to US$86 a ton for 2014. He expects the market will edge higher to US$95 a ton by 2018, still a downgrade of more than 10% on the bank’s earlier price forecast.
destined for：驶往，去往 downgrade：退步，下坡
Goldman Sachs GS +1.17% also has taken the knife to its forecasts, cutting its 2014 price estimate 13% to US$83 a ton and warning that the window to invest profitably in new thermal coal mines is closing.
