Coal consumption in China is not expected to improve this year, subtly indicating that the domestic prices will also not go up.
In that country, the prime coal consuming sectors are in a state of slowdown. Thermal power generation has gone down by around 5.9% in Apr’16 due to rise in hydro power generation. Crude steel production also has declined after a substantial rise in Mar’16.
The Chinese coal market is already in a state of over-supply, with producers lowering production aimed at raising prices. During Apr’16, coal production in that country was lower by 11%, at 268 MnT as compared with the production in the corresponding month of the previous year, according to the National Bureau of Statistics, China. Even during the Jan-Apr’16 period, the production declined by 6.8% to 1.081 billion tonne against the same period of the preceding year, according to the bureau. Production is also expected to decrease in the coming months of 2016, to record the third consecutive annual production decline.
The surplus production has led the Chinese government to adopt measures to idle 500 MnT of capacity in the next five years.
Apparently, the over-supply has taken a toll on the imports into that country. According to the customs authority in China, coal imports into that country were down in Apr’16 by 4.5% to 18.8 MnT as compared to that in Mar’16. Also, the cumulative imports in the first four months of 2016 were recorded lower by 2.5%.