Domestic coal market softened in Sep. Booming coking coal market disappeared, revising an upward trend that had started since the year beginning. Gloomy steel market and plummet in coke price led to a slowing demand for clean coking coal. Amid production cuts in downstream sectors, local and small coal mines lowered their prices of clean coking coal in Sep, but prices of large state-owned mines kept stable, basically same as in Aug. As to thermal coal, stockpile hit record highs in Qinhuangdao, China’s largest loading port of the fuel, reaching nearly 9 million tonnes by the end of Sep. As a result, thermal coal price declined at Qinhuangdao, but kept stable in consumer markets.

October would be a challenging month for clean coking coal as steel mills and coking plants will reduce production, and large state-owned coal mines would probably lower their prices. Thermal coal market will see active demand from coal storing for winter heating in northern China.

Supply and Demand
Coal production went up steadily in August. Total raw coal output increased 22 million tonnes or 10.50% from a year earlier to 232 million tonnes in August, and grew 180 million tonnes or 11.46% to 1,751 million tonnes in the first eight months, according to preliminary data released by the State Administration of Work Safety.

China had a total of 149.26 million tonnes coal in stock by the end of August. That was an increase of 11.80 million tonnes or 8.58% from the previous month, but a reduction 260,000 tonnes or 0.17% from the beginning of this year.

Coal demand from the power industry reduced in August as comparing with July, down 6.78% from July, mainly due to record-low power generation, only up 5.14% year on year. This was the lowest growth in past eight years, caused by factors such as economic slowdown, production suspension of industrial enterprises for the Olympic Games. Meantime, many power plants were forced to shut generators because of insufficient coal stocks and low on-grid power tariff, which was still falling behind of increase in coal price despite two rises by the government. The shutdown of energy-guzzling factories to improve air quality for the Beijing Olympics also reduced power demand.

Slow growth in the pig iron and synthetic ammonia industries continued in August, with pig iron output falling 4.6% from July and synthetic ammonia down 5.3%. Cement production increased 0.35% from July as booming construction industry usually begins in Sep.

Production of Four Major Coal-consuming Industries
Unit: 1000 tonnes