China’s coal industry is experiencing a surplus due to increased production and a slowing economy. This situation has led importers to consider reducing their coal volumes under long-term contracts for next year, according to a report by Bloomberg, which cites the country’s primary coal trade organization.
This year, Chinese importers have reported losses on their thermal coal purchases, the type used in power generation, as domestic prices remain low, according to the China Coal Transportation and Distribution Association.
Analyst Amy Xu from Fenwei Energy Information Service predicts that coal imports could decrease by 4% next year, reaching about 490 million tons.
However, there are factors that could drive coal prices up in the short term. These include the potential for colder winter weather and recent government initiatives aimed at stimulating the economy, according to the trade body.
Last month, coal production in China increased by 4.4%, totaling 414.46 million tons, as reported by government data. The production also rose from the previous month; in August, the total was 396.55 million tons.
This rise in output follows the conclusion of safety inspections in coal-producing areas and the return of coal-to-chemicals facilities to regular operations after maintenance.
The primary demand for coal comes from the power generation sector, where it remains the dominant energy source, as well as from heavy industry. According to the state statistics agency, coal power generation rose by 8.9% in September compared to the same month last year, totaling 545.1 billion kWh.
Additionally, China’s coal imports climbed to 47.59 million metric tons in September, marking a 13% increase from September 2023. This rise in imports was largely fueled by favorable price differences between foreign and domestic coal supplies.
Despite a surge in hydropower generation earlier this year due to heavy rainfall, coal still represents about 60% of China’s energy production.
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