Goldman Sees China’s ‘Stealth’ Coal Bailout Lasting to 2020
- Miners unable to service 3 trillion yuan debt without cuts
- Qinhuangdao prices up about 65% as YTD output drops 10.5%
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China’s coal production restrictions are a “stealth” bailout for miners and their creditors that may last until the end of the decade as the policies help boost prices, according to Goldman Sachs Group Inc.
Without government intervention, China’s coal industry wouldn’t be able to service the nearly 3 trillion yuan ($444 billion) in debt from investing in new mines before demand started to drop, the banks analysts including Christian Lelong wrote in an Oct. 20 note. The twin goals of the mining restrictions have been to develop a “safe, solvent and efficient” industry and protect the country’s financial system from the risk of large-scale defaults, they wrote.