China’s coal output returned to growth and hit highest this year in Oct after government measures to boost production

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China’s coal output returned to growth in October and hit the highest level this year after the government took a series of measures to ensure coal supply to ease a shortfall and stabilize surging coal prices.

China’s coal output reached 360 million tonnes in October, marking the highest level this year and rising by 4% from a year earlier, according to data released by the National Bureau of Statistics.

That reversed the 0.9% year-on-year drop in September and was 5.5% higher than the same period in 2019, leaving the two-year average growth at 2.7%.

During the first ten months of the year, China’s coal output reached about 3.3 billion tonnes, representing an increase of 4% from the same period last year, well below the 9.6% growth in the same period in 2019, showed the data.

China’s coal supply has been tight this year due to environmental protection measures and stepped-up safety inspections after several coal mine accidents, leading to a shortfall in electric power supply and restrictions in power use in many regions. Since late September, authorities have accelerated approval of new coal capacity to ensure coal supply in the heating season.

As of October 20, regulators had added 153 mines to the list of coal mines with the task of ensuring coal supply and fast-tracked approval process, according to the National Mine Safety Administration. That could add 220 million tonnes per year of coal capacity, of which 55 million tonnes of capacity will be added in the fourth quarter this year.

In addition, China’s coal imports jumped 96.2% in October from a year earlier to 26.92 million tonnes, showed the NBS data. In the first ten months of the year, coal imports reached 260 million tonnes, rising by 1.9% from the same period last year, compared to a 3.6% drop for the first nine months.

While coal output picked up, the growth of coal consumption slowed last month due to weaker demand in the traditional low season and restrictions on production in energy-intensive sectors which curb coal demand from non-power industries.

According to data from the China Coal Transportation and Distribution Association (CCTD), China’s power generation by coal-fired power plants fell by 5.5% in October from the previous month and key steel companies’ pig iron output fell by 6.3%, curbing growth of coal consumption.

The pick-up in coal production and softening demand is easing the coal shortage. By the end of October, coal inventories at China’s power generators stood at about 110 million tonnes, jumping 35.4% from a month earlier and equivalent to 19 days’ coal consumption, according to CCTD.

That has pushed lower coal prices. By the end of October, spot Bohai Rim thermal coal of 5,500 kcal had declined to below 1,200 yuan per tonne from the recent high of 2,600 yuan per tonne, according to CCTD. Pit-head prices of 5,500 kcal thermal coal in the three major coal productions hubs – Shanxi province, Shaanxi province and Inner Mongolia – had fallen below 1,000 yuan per tonne.

Into November, coal supply has increased further. In the first ten days of the month, daily coal output was above 11.5 million tonnes in every day but November 6, according to CCTD and the top economic planner NDRC. On November 10, daily coal output hit a new record high of 12.05 million tonnes.

The CCTD said authorities will continue adding new qualified coal capacity and coal output is expected to increase further.