China coal miners boost output, but consumption rises as winter nears

19 December 2016

China’s coal miners ramped up output in November, but production was still down year-on-year and power consumption rose at its fastest pace in years, underlining the government’s difficulties as it tries to avert a winter energy crisis.

The data was the strongest sign yet that miners are struggling to comply with government orders to crank out more thermal coal supplies for the power sector ahead of the busiest and coldest months of the year.

Production in November fell to 308.1 million tonnes, up 9 percent from October, but still down 5.1 percent from a year ago, the National Bureau of Statistics data showed.

The pace of output cuts year-on-year slowed compared with double-digit percentage drops since March and analysts expect data to register a rise in December, the first in at least 18 months, as fresh supplies hit the market.

But the data surprised some market followers after a senior industry executive on Monday said output had grown month-on-month and year-on-year and after a series of emergency measures by the government to boost output.

Mining executives say increasing capacity or reopening idled mines has been slow, particularly for smaller companies, as they have to rehire workers and refurbish equipment.

“Production is recovering very slowly toward the year-end,” said a Shaanxi Yulin based coal executive, adding that it takes a long time to reopen a small mine.

Separate data on Tuesday showed monthly power consumption rose 9 percent in November on a year earlier, the fastest pace since February 2014.

The jump is partly due a vicious cold snap that gripped northern China early last month and better-than-expected manufacturing levels.

Still, the combined numbers illustrate the task facing Beijing as it scrambles to replenish supplies ahead of the cold winter months and quell a months-long rally in prices, which have doubled since May.

Some of the steps taken reversed major policies introduced earlier this year aimed at tackling a glut and cutting the world’s top energy market’s dependence on fossil fuels by closing mines and limiting the number of operating days.

Source – Reuters