China expects its coal capacity to rise by a net 200mn t/yr this year, as increases at more advanced mines outstrip shutdowns of older operations. The capacity increase could boost production by 100mn t in the second half of this year, as the government looks to meet stronger demand.
China added 90mn t/yr coal capacity in the first half of this year, national economic planning agency the NDRC said in a work meeting today focusing on thermal coal supply during the peak summer season. It eliminated 111mn t/yr of production capacity in January-June, accounting for 74pc of the 150mn t/yr target for 2017 as a whole, the NDRC said.
The country will boost capacity at “advanced” mines over the reminder of this year, resulting in a net capacity increase of 200mn t/yr after deducting the outdated capacity that is due to close.
The NDRC today also asked regional authorities to control the pace of inefficient mine shutdowns to avoid coal shortages, and to guide coal producers to stabilise prices within the government-set range of 500-570 yuan/t ($74-84/t) fob northern Chinese ports for NAR 5,500kcal/kg coal.
The announcement follows the NDRC’s decision last month to allow its regional subsidiary administrations and coal industry authorities to increase approved capacity at operational open-cast or low-gas underground mines. The increases will be allowed only at mines that have all the necessary permits, and where technical capacity is higher than current approved capacity.
The efforts to increase coal capacity are an attempt to meet stronger thermal coal demand, which is being driven by robust industrial power consumption. Demand for thermal coal increased by 8.2pc in June from a year earlier, while total power demand rose by 6.3pc, the NDRC said. China’s industrial output rose by 7.6pc over the same period, accelerating from 6.5pc growth in May. Hot weather pushed coal burn to 5.55mn t/d on 13 July, a record high for the summer period.
The capacity increase could boost production by as much as 100mn t in July-December, or about 5.8pc of China’s actual output of 1.71bn t in January-June. This may increase domestic supply and weigh on imports. January-June production was up by 5pc from a year earlier.
The Chinese government allowed most domestic mines maintain a more relaxed working day limit of 330 d/yr after last winter, up from the stricter limit of 276 d/yr that was in place at all mines over March-September last year.
China’s coal imports fell in June compared with the same month last year, the first such decline since August 2016. Total imports — including anthracite, coking and thermal coal — were 21.6mn t last month, customs data show. This was down by 2.7pc from May and lower by 0.7pc compared with a year earlier.
