China's SASAC urges coal miners to lift output ahead of winter power demand surge
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Mysteel: China's coal producers should step up production to guarantee sufficient fuel for electricity generation this winter, China's State-owned Assets Supervision and Administration Commission (SASAC) instructed during an energy work meeting held in Hainan on November 4.
Representatives from 18 state-owned enterprises (SOEs) involved in energy attended the meeting, with China National Petroleum Corporation, PipeChina, State Grid Corporation of China, State Power Investment Corporation, China Three Gorges Corporation and China Energy Investment Group each reporting their current energy supply situations, according to the SASAC's website.
The commission emphasized that the coal mining companies that SASAC administers must fulfil their roles as "pillars" in contributing to increased coal supplies, while other key SOEs should increase purchases of steam coal as well as natural gas proactively, the report said.
This move aligns with the forecast of the country's National Climate Centre that Chinese regions may experience some strong cold snaps and heavy snow falls for certain periods this winter.
At a press conference held in late October, China's Meteorological Administration also warned of the large possibility of periodical temperature slumps between December and February, particularly in some parts of Northeast China, Northwest, Inner Mongolia and Xinjiang.
China's coal production this year had experienced sharp falls due to strict monitoring of mine operations by local authorities to ensure that mining companies are not operating beyond their approved capacity. The tougher inspections were aimed at reducing mine accident rates that had soared in 2023, as Mysteel Global reported.
Data from the country's National Bureau of Statistics (NBS) show that China's production of all kinds of coal during this year's January-September period totalled 3.48 billion tonnes, representing a tiny rise of 0.98% compared with the first nine months of last year. The statistics for October output will be released soon, but the likelihood of the data showing a notable rise is small, market sources predicted.
Mysteel's data indicate that the capacity utilization rate among the 426 Chinese thermal coal mines in October averaged 95.98%, basically flat from a rate of 95.7% logged in September.
The miners' production enthusiasm has also been dented by long-standing sluggishness of coal trading this year, as strong hydropower generation had squeezed thermal power output, as reported. Steam coal demand in September came off the August peak as domestic power consumption declined.
Besides, Chinese users' preference to cheaper imported coal has also led to reduced interest in domestically-mined cargoes. This was evidenced by the 10.7% on-year increase in China's total thermal coal imports during January-September to 289.47 million tonnes, China Customs data show.
Coal remains a base energy source in China and the commission's call that miners step up production is also in response to the decline in power generated by renewable sources from autumn, Mysteel Global understands.
For example, China's hydropower output in September had plummeted by 26.6% on month to 119.9 billion kilowatt hours (kWh), which was also 14% lower than in September last year, according to the NBS data.
In parallel, nuclear and solar power generation last month also slowed to 35.5 billion kWh and 32.3 billion kWh in the month, respectively, down by 11.7% and 16.2% from August, the data indicate.
The directive for higher coal production, coupled with a relaxation of safety checks in the second half of this year, will likely give a boost to domestic coal mining activity in the coming months, market insiders predict.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
