China’s Coal Production Fell 3% in August

China’s coal production declined by 3% last month as a result of government measures taken to shrink oversupply.

At 390.5 million tons, the August total compared with 80.99 million tons for the previous month, when coal production fell to the lowest in 12 months, the state statistics bureau said, as quoted by Reuters.

Production over the first eight months of the year, however, was 3% higher than the year-ago period, at 3.17 billion tons. The increase was the result of higher production in the first half of the year, before the authorities clamped down on excess supply.

The authorities in Beijing this year launched a sweeping campaign against overcapacity across industries in an attempt to reverse a trend that has become popular in media coverage of the country’s economy as a race to the bottom. The trend is especially evident in heavily subsidized industries such as solar power but also in coal production as China seeks to secure domestic supply of the hydrocarbon that still accounts for the biggest portion of its power generation.

In coal, the government campaign against overcapacity has taken the form of mine inspections to make sure they are not producing over government-issued quotas. The inspections have contributed to the decline in production in both July and August.

Meanwhile, however, China has stepped up its new coal power generation capacity approvals. After a dip last year, new capacity is back on the table, with 21 GW in new additions commissioned during the first half of the year, two climate-focused think tanks reported in August. They also forecast that the total in newly commissioned coal power capacity in China for this year could hit 80 GW.

This additional capacity should help curb excess coal production and reduce imports. Indeed, one coal producer forecast that both domestic production growth and imports of coal will slow down further over the second half of the year.

By Irina Slav

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