China’s Coal Production is Down

May 14, 2016, 2:33 PM UTC
A worker is jumping down from the steam locomotive
FUXIN, LIAONING PROVINCE, CHINA - 2015/07/06: A worker is jumping down from the steam locomotive, which will dump the coal cinders beside the rail. The waste coal cinders have heaped up to form a highland in the city suburb. Fuxin, located in China's northeast Liaoning Province, which had the biggest open cast mine in Asia and relied mainly on mining in the 1960s, is transforming the development mode of economy and making the last steam locomotives retired from service, because of the environmental pollution and coal exhaustion. (Photo by Zhang Peng/LightRocket via Getty Images)
Photograph by Zhang Peng — LightRocket via Getty Images

China produced 268 million tons of coal in April, down 11% on the year, the National Bureau of Statistics said on Saturday, with producers cutting back in a concerted effort to shore up prices.

China’s coal sector has been struggling with a massive capacity glut and miners have been encouraged to cut production to shore up domestic prices, which plummeted around 30% last year. The country has promised to shed 500 million tons of surplus capacity in the next five years.

Coal output over the first four months reached 1.081 billion tons, down 6.8% from the same period last year, with full-year production on course to see its third consecutive annual decline.

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Though coal consumption normally rises in the second quarter, with supplies traditionally under intense pressure as power plants boost their reserves ahead of the summer peak, analysts do not foresee any jump in prices, particularly as high hydropower volumes reduce the need for coal-fired generation.

“Entering May, the weather has been fine, residential power use has stayed weak and power plants are undergoing routine maintenance, and also we have the heavy rainfall in the south that has boosted hydropower,” said Chen Jie, an analyst with the China Coal Trade and Distribution Centre, in a research note.

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Thermal power generation hit 328 billion kilowatt-hours (kWh) in April, down 5.9% on the year, though a 10% jump in hydropower generation during the month meant overall volumes fell by just 1.7% to 444.4 billion kWh.

Crude steel production hit 69.42 million tons, down from a record-high in March but 0.5% higher than the same period of last year, with mills still keeping output high in order to profit from higher prices.

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The production of coking coal used in steelmaking fell 3.4% in April to 36.25 million tons, with year-to-date output reaching 138.87 million tons, down 7.6%.

Cement production reached 216.26 million tons in April, up 2.8% on the year, extending a period of restocking that began in March as new construction activities get underway.

According to data from China’s customs authority, imports of coal reached 18.8 million tons in April, down 4.5% compared to March, but up 10.4% on the year. Imports over the first four months fell 2.5%.

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