China: Raw coal output in key hubs rises in May

• Output from top 5 hubs rises 6% y-o-y, 4% m-o-m
• China’s coal imports plunge by 18% y-o-y in May

Mysteel Global: Raw coal output across China’s top five producing hubs steadily increased in May compared with a year earlier, laying a solid foundation for a rise in the national output.

Shanxi, the country’s largest coal base located in North China, produced 110.09 million tonnes (mnt) of raw coal in May, marking a 3.4% rise from a year earlier, although the figure was moderately lower by 0.5% from April, according to the latest data released by the country’s National Bureau of Statistics (NBS).

Other key producing regions, including Inner Mongolia, Shaanxi, Xinjiang and Guizhou, also registered positive y-o-y and m-o-m growth, the NBS data showed.

The top five churned out 341.64 mnt on aggregate last month, up 5.8% y-o-y and by 4.3% m-o-m, the data showed. The five regions produced nearly 85% of the country’s coal production last month.

In May, China’s total production hit 403.28 mnt, up 4.2% y-o-y and 3.6% m-o-m.

The boost in domestic production came as China’s coal imports retreated sharply, with May shipments falling 17.7% y-o-y to 36.04 mnt, according to Chinese customs data, hinting at a change among Chinese buyers preferring homegrown supply over seaborne cargoes.

However, the production momentum may be short-lived. This month, a series of fatal coal mining incidents prompted authorities to intensify safety inspections, particularly across key regions such as Shanxi and Inner Mongolia. The stepped-up enforcement coincides with China’s annual “Work Safety Month,” amplifying regulatory pressure on producers, Mysteel Global noted.

Adding to the headwinds, coking coal miners have begun curbing operations in response to rapidly falling prices. As of 18 June, the Mysteel China Coking Coal Composite Index has shed 5.5% from the beginning of the month to RMB 942.1/tonne (t) ($131.1/t), the lowest level since the index was established in April 2018.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.