Exports of coal-fired equipment to top US$2b

The mainland's exports of coal-fired power generating equipment are expected to exceed US$2 billion this year amid increasing demand from emerging markets such as India, according to UBS.

Increasing overseas shipments would help makers of the equipment to overcome dwindling domestic demand in a sign that inexpensive Chinese-made products are accelerating their global reach.

'Looking solely at the domestic market, the power generating equipment makers are grappling with oversupply,' said Patrick Dai, a UBS Securities analyst. 'But a good sign is that the companies are going outbound to tap foreign markets.'

Equipment sales this year will likely have a total capacity of 22 gigawatts against 16 gigawatts in 2009, UBS said.

The overseas sales will represent 15 per cent to 17 per cent of the Chinese manufacturers' total sales.

In recent years, power equipment makers have started to explore foreign markets.

In October last year, Shanghai Electric Group, the mainland's largest producer of coal-fired power generating equipment, signed a deal worth US$8.3 billion with Reliance Power to supply 36 coal-fired thermal power generation units in the next three years.

Brazil and countries in North Africa and the Middle East are also targeted markets for China's equipment makers, Dai said.

India, which has one of the world's lowest power consumption rates per capita, will become the key growth engine for Chinese equipment makers.

Separately, UBS said wind turbine makers on the mainland will be struggling this year amid overcapacity and intense competition.

'Many of the companies can't survive unless they can secure overseas orders,' said Dai.

28%

Shanghai Electric's percentage of overseas sales from coal-fired plants in 2009

- 22 gigawatts of power will be sold this year