Chinese coal production fell again last month, dropping 6.8% year-on-year to 385 million tons in September, according to the statistics bureau. Thermal power output declined 1.4% over the month, indicating utilities needed less coal for electricity generation. The industry's slow recovery has lifted thermal coal prices to three-year highs, as safety checks following a deadly mine blast in May have constrained supply, particularly in Shanxi province.
Seasonal stockpiling may push prices higher through November, though the China Coal Transportation and Distribution Association sees little risk of a nationwide shortage. Still, higher prices could tighten supply in regions lacking abundant reserves. China has worked to increase output since the blackouts that blighted the economy at the beginning of the decade, though a slowing economy and strong imports have eased some pressure.
Forecasts of milder winter temperatures also reduce strain on supply. Oil Chem analyst Nicole Li warned China could face a shortfall of 71 million tons this year, widening to 100 million tons in 2027 if the war in the Middle East diverts coal to chemicals manufacturing. Morgan Stanley analysts said Shanxi output could still drop 10% this year despite mine resumptions, as producers grow cautious under safety rules.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing