China Oct coal output down 1.2 pct on yr

coal

China produced 317 million tonnes of coal in October, down 1.2 percent from the same month last year, National Bureau of Statistics data showed on Wednesday, with struggling miners cutting output to minimise losses.

China’s massive coal industry is suffering from faltering demand and a huge supply glut, while also being squeezed by government efforts to cut pollution.Output in the first 10 months reached 3.045 billion tonnes, down 3.6 percent from the same period a year ago, Wednesday’s data showed.

Prices of thermal coal at the key northern port of Qinhuangdao have fallen 28.6 percent so far this year amid chronic oversupply and declining demand from key downstream industries like steel, thermal power and cement.

Crude steel production during the first 10 months of the year has fallen 2.2 percent on the year to 675.1 million tonnes. Thermal power output dropped 2.6 percent over the same period, while cement production declined 4.6 percent.

Output of coking coal, used in steelmaking, fell 9.4 percent on the year in October to 37.17 million tonnes.

More than 80 percent of China’s coal mining firms are now making losses, according to the China National Coal Association (CNCA), and big miners have been cutting production or suspending operations at some sites.

Shenhua Energy Corp, the listed arm of China’s biggest state coal producer, said in its third quarter report last month that it cut output by 10 percent to 234 million tonnes in the first nine months of the year.

China Coal Energy, another state miner, reduced output by 18.1 percent to 71.6 million tonnes over the period, but industry officials say the cuts are insufficient.

“We have summoned the governors from the three biggest coal producing provinces, plus two leading state-owned companies, to more than 40 meetings on cutting production – all have failed,” said Zhang Shaoqiang, a CNCA official, at a conference last week.

Shenhua Energy saw profits fall 41.5 percent in the first three quarters. China Coal Energy and China Datong Coal Industry both made losses of more than 1 billion yuan ($157.23 million) over the period.

China’s declining demand has also hurt imports, which fell just over 30 percent on the year to 13.96 million tonnes in October, according to China’s customs authority.Analysts said the decline in shipments was partly a consequence of rising freight costs, which had eroded the price advantages of imported coal.

Source: Reuters

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