Analysis of Global Power Market

Analysis of China's Power Operation Market Analysis of Fuel Prices (1/3) Market Price of Steam Coal*, China, 2013-2023E RMB per Tonne 611.3 593.1 573.0 546.8 536.9 527.2 517.6 650 592.2 600 550 523.5 500 459.4 450 427.2 400 350 300 CAGR(13-18) CAGR(18-23E) 250 Steam Coal 0.0% -2.7% 200 150 100 50 0 2013 2014 2015 2016 2017 2018 2019E 2020E 2021E 2022E 2023E • • Highlights Market price for steam coal bottomed out in 2015, resulting from various factors such as the slowdown of China economic growth, reduced consumptions by downstream industries(e.g. steel industry) and substitution effect by new energy resources. Furthermore, fierce competition in coal mining industry further pulled down the coal price, indicating the urgency to resolve the excessive capacity issue. The market price of steam coal increased from 2016 to 2018, signalling a rebalance between coal supply and demand to be reached, after the completion of removing excessive capacity exercise within the coal industry. coal price is anticipated to decrease gradually in the foreseeable future. On one hand, advance in coal mining and production technology will drive down production cost of coal thus further lead to price decrease, and on the other hand, tightening environmental protection requirements may force downstream industries to reduce coal consumptions and turn to alternative energy solutions. * Steam coal is represented by steam coal with calorific value of 5,500kcal/kg from Qinhuangdao, China Source: Frost & Sullivan FROST SULLIVAN 69

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