September 2005 was a turning point in the high-level operation of the coal mining industry, and the coal mining industry has seen signs of a downturn thereafter. From January to July this year, the coal industry climate index fell by 32 points compared with the same period of last year.
The reason is that the increase in costs and the difficulty in rising prices have had the greatest negative impact on the decline in the coal and ferrous metals mining industry. Since the second half of 2005, due to high product sales costs, the gap between the sales growth rate of coal mining products and the growth of sales costs has continued to widen. Since April 1, the state has raised the coal resources tax in Shaanxi, Jiangsu, Heilongjiang, and Jiangxi provinces. Recently, the country has adjusted its electricity and oil prices and raised railway tariffs and port fees. These policy increase factors have increased coal prices. Production costs and transportation costs. From January to July of this year, the cost of sales of coal products increased by 32% year-on-year, which was 7.9 percentage points higher than the sales revenue of products during the same period.
The growth rate of sales cost of ferrous metals in the ferrous metals mining industry has continued to exceed the growth rate of sales revenue since 2005. In the second half of 2005, the gap between the two has shown signs of shrinking, but as of January 1, 2006 Since then, China has begun to raise the levy standards for resource taxes on iron ore and manganese ore, and the gap between cost growth and income growth has widened again. From January to July, the cost of ferrous metal mining product sales increased by 37.8% year-on-year, which was 8.7 percentage points higher than the sales revenue growth over the same period. The high cost growth squeezed the profitability of the two industries.
As the supply and demand of coal is gradually balanced, the buyer’s market is gradually increasing and the coal price is not rising. The iron ore is affected by the decline in the benefits of the downstream steel industry. The price increase lacks strong support. Since 2006, the ferrous metals mining industry’s ex-factory price index The monthly decline decreased by 3.6% in July compared with the same period of last year. The ex-factory price index for coal mining industry products also gradually stabilized. In July, it only increased by 2.8% year-on-year. One of the direct effects of price declines is the lack of productivity growth.
In addition, the overstocking of product inventories and the slow turnover of funds are also important reasons for the decline in coal mining and ferrous metals mining industry. From January to July, the inventory of finished products from the coal mining and ferrous metal mining industry reached 72.117 billion yuan and 283.463 billion yuan, respectively, an increase of 44.4% and 34.1% year-on-year, respectively, and the net amount of corporate accounts receivable increased by 38.4% and 20.7% year-on-year, respectively. Accelerated by 16.3 and 12.4 percentage points respectively over the same period of last year.
Under the influence of the aforementioned factors, the profitability of the ferrous metals mining industry has continued to decline, and the negative profit growth situation since 2006 has not been improved; the profit growth rate of the coal industry has also been declining (also related to the higher profit base of the previous industry). With the further manifestation of the effects of macro-control, the excessively rapid growth of high-energy-consuming industries will be further restricted. The total supply and demand of coal in the country will tend to ease, pressures for overcapacity will increasingly appear, and coal prices will face downward pressure. However, the country’s efforts to increase safety production rectification, strengthen environmental pollution control, and increase recovery rates will inevitably lead to increased corporate costs, and therefore the coal industry is still facing downward pressure on the economy.
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