Major Chinese producers push up coal output

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Coal production by major Chinese state-controlled producers Shenhua Energy and China Energy increased in August, slowing the decline in China's national coal output.

Shenhua Energy, the listed subsidiary of China's biggest state-controlled coal producer China Energy Investment, produced 23.9mn t of coal in August. The monthly production increased by 2.1pc on the year, reversing straight year-on-year declines in February-July.

This took Shenhua Energy's production to 193.2mn t in the first eight months of this year, steady from the year-earlier period. Production in the first eight months accounted for 72pc of the company's 2020 production target of 268mn t.

Fellow producer China Coal Energy, the listed subsidiary of China Coal, produced 9.8mn t last month. This was up by 9.3pc on the year, the biggest year-on-year growth since April.

August production propelled China Coal Energy's cumulative output to 72.56mn t in January-August, up by 6.1pc on the year. The producer early this year set a target of producing and selling 96mn t of coal in full-year 2020.

The production hikes by Shenhua Energy and China Coal Energy contributed to a gentler decline in China's national coal production. China's output of all types of coal reached 325.81mn t during August, a dip of 0.1pc compared with the same period last year although it was a 2.48pc recovery from July's 317.94mn t, according to the national bureau of statistics.

Coal sales by Shenhua Energy remained relatively steady in August against the same month last year to hit 38mn t. China Coal Energy increased its coal sales by 21pc on the year to 23.56mn t last month. Both producers' sales included the coal they produced and sold and the coal they bought from other producers and sold.

Despite the stronger supply from major domestic producers, overall domestic coal supply remained tight this month because of persistent government curbs on domestic production and import restrictions.

Shenhua Energy had set its spot price at 556 yuan/t fob Huanghua port for NAR 5,500 kcal/kg coal sold in 1-7 September. But the producer stopped selling spot coal recently to prioritise its delivery of term coal given overall shortages.

The government of China's Shaanxi, the biggest coal-producing province, has started a round of safety checks at local mines that will run from 14-30 September. The move could further tighten supply from the province given that it has also been tightening sales permits.

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