New plants do not 100% translate to more use. Some are replacing older, less efficient plants. More importantly, there's the issue of utilisation. Specifically, modern plants in China can be ramped up and down more efficiently than previous technology allowed. Further, many of their plants have been retrofitted to be able to ramp up/down their power outage. As noted earlier, of course they cannot do this as elegantly as some LNG power plants, but coal plants being able to do so makes a material impact on their utilisation rates.
While I firmly believe that coal demand in China will increase, the extent of the increase can be easily overstated by just looking at the new power plant figures.
When looking at the issue of increase in Chinese coal supply, keep in mind that the Chinese government was spooked when there was a shortage of coal a few years ago. Its goal is to be free from relying on coal imports to the greatest extent possible.
WHC Price at posting:
$5.79 Sentiment: None Disclosure: Not Held
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