China’s Coal Output Faces Challenges Amid Safety Checks and Increased Demand
China’s coal production growth for this year is expected to be in the range of -1% to 1%, a revision from the previously forecast 1% expansion, according to Li Xuegang, deputy chairman of the China Coal Transportation and Distribution Association (CCTD). Speaking at a seminar on Wednesday, Li highlighted the difficulties facing the industry.
In 2023, China, the world’s largest coal producer, mined 4.66 billion metric tons of coal, marking a 2.9% year-on-year increase, according to the National Bureau of Statistics.
However, meeting the production target for 2024 is proving challenging, particularly for Shanxi, a key coal-producing region aiming for 1.3 billion tons.
Shanxi has paused production at numerous mines due to safety checks following a rise in fatal accidents. This has contributed to a national coal output decline in April, the lowest monthly level since October 2022.
Li indicated that tighter supply, coupled with anticipated stronger domestic demand, will likely sustain Chinese coal prices at a minimum of 860 yuan ($121.24) per ton, higher than last year’s levels.
Looking ahead, China is expected to add 40 GW of new coal power plant capacity in 2024, slightly lower than previous forecasts. In 2023, the U.S.-based Global Energy Monitor reported that 47.4 GW of new coal power plants came online in China.
Coal imports are also adjusting. CCTD analyst Su Huipeng forecasted a drop in May coal imports compared to April’s 45.25 million metric tons, attributing the decline to narrowing price arbitrage, high power plant inventories, and increased hydropower generation.
While no new forecast for annual coal imports was provided, imports from January to April totaled 161.15 million tons, a 13% increase year-on-year.
China is set to increase purchases of Russian coal in the coming months, benefitting from Russia’s suspension of coal export duties from May to August. However, logistical constraints and western sanctions on Russian coal traders will limit this increase.
Li also noted that China’s reinstatement of coal import tariffs of 3-6% on Russian and Mongolian sellers from January has had a “relatively limited impact” on overall coal imports.
