- Domestic coal gains traction amid competitive prices
- Higher demand from mills spurs coking coal production
Mysteel Global: China’s total output of raw coal for all uses rose by 9.6% y-o-y to 440.58 million tonnes (mnt) in March, hitting a record high, according to the latest release from China’s National Bureau of Statistics (NBS) on 16 April. The March result took total output during the first quarter to some 1.2 billion tonnes (bnt), up by 8.1% y-o-y.
The NBS data showed that China’s daily raw coal production during March averaged 14.21 mnt/day, higher than the January-February average of 12.97 mnt/d and above the March 2024 average of 12.88 mnt/d.
The notable y-o-y rise in coal output last month could be partly attributed to the low comparison value in March 2024 of 399.33 mnt. Back then, coal output had been constrained by (1) tepid demand for thermal power generation due to moderate temperatures and (2) high coal inventories.
Moreover, during the first quarter of last year, coal production was dented by a succession of mining accidents, which forced some mines in Shanxi – China’s coal heartland – to halt their operations and submit to safety inspections.
During last month too, the persistent declines in domestic coal tags reduced the price advantage of seaborne cargoes for Chinese buyers, and this led to lower imports over the month. China customs data show total coal imports in March were down by 6.4% y-o-y at 38.73 mnt.
The record-breaking monthly coal output seemed a departure from calls for coal production curbs from the country’s two coal industry bodies in February, also suggesting that China’s coal market still needs to grapple with its supply surplus.
About three-quarters of China’s coal production consists of steaming coal used mostly for producing electricity, and during March, thermal power generation decreased by 2.3% y-o-y to 509.9 billion kilowatt-hours, other NBS data show. The y-o-y fall was partly a consequence of the early arrival of warmer weather this year, which reduced the need for thermal power utilities to lift production for household heating.
Meanwhile, production of coking coal last month was boosted by the uptick in steel production among Chinese steelmakers, which served to lift coking coal demand from steel mills and independent metallurgical coke manufacturers.
Last month, the growth in coke production in China climbed up at a faster pace than that during January-February, with coke output up by 4.1% y-o-y at 41.29 mnt in March, the NBS data show. Consequently, the country’s output of coke stood at 123.27 mnt during the first three months of his year, up by 2.4% from the same period last year.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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