China's coal production reached 1.11 billion tonnes in the first quarter of 2024, falling 4.1% compared with the same period last year, the latest data from the National Bureau of Statistics showed.

 

In March alone, the country produced 399.33 million tonnes of coal, down 4.2% from the year-ago level, according to the NBS. 

 

The output figures cover coal mining enterprises with annual revenue at and above 20 million yuan ($2.76 million).

 

 

Factors contributing to the drop include milder-than-expected winter temperatures, which led to an oversupply in the market, and stringent safety regulations following a series of accidents in Shanxi, a major coal mining province.

 

Shanxi, responsible for one-third of China's total coal production, saw an 18.1% decrease in output during January-February period. March's data are expected to be released officially in days.

 

Additionally, a prolonged period of weak demand and declining prices have hindered production, with some coal mines facing high inventory levels that disrupted mining operations.

 

The benchmark 5,500 Kcal/kg NAR grade witnessed a continuous decrease in prices, falling from around 960 yuan/t in late February to 820 yuan/t FOB with VAT at northern ports, according to Sxcoal's price assessment.

 

However, concerns over energy security remain, as renewables are not yet reliable sources of power and China heavily relies on coal for stable electricity generation.

 

Against this backdrop, industry analysts project that China's coal production in 2024 could remain stable or experience a slight increase compared to 2023. Feng Dongbin, vice generaly manager of industry consultant Fenwei anticipates a 1.0% rise in this year's coal production to 4.76 billion tonnes.