China's raw coal production increased in August compared with July, as robust summer peak demand outweighed the impact of heavy rainfall in major coal-producing regions, operation disruptions leading up to the early September military parade, and overproduction inspections.

In August, China produced 390.40 million tonnes of raw coal, sinking 3.2% from the previous year, which shrank by 0.6 percentage point from July, showed the latest data from the National Bureau of Statistics. The output figure was 2.50% or 9.5 million tonnes higher than the month before.

Daily coal production averaged 12.6 million tonnes in August, up from July's 12.29 million tonnes but down from 12.79 million tonnes in the same month last year.

As demand for air conditioners rose amid record-breaking high temperatures, grid loads surged to unprecedented levels. Hydropower and solar generation in several regions faced limitations, amplifying the role of coal-fired plants in maintaining grid stability. This seasonal peak in electricity usage pushed coal burns at power plants to high levels.

Despite disruptions in the month, large mines maintained stable operations, supported by high fulfillment rates of long-term coal supply contracts.

Even so, August's output level was still lower than the preceding year as the overall coal supply remained relatively loose and coal consumption fell short of expectations due to the rising proportion of renewables in China's power mix, healthy coal inventories at thermal power plants, and tepid demand from non-power sectors.

Looking ahead, industry insiders anticipate China's coal production to rise in September as the rainy season draws to a close in the northern region, the effects of the parade dissipate, and overproduction inspections exert limited pressure on output. September output also typically surpasses August's.

Given the high base of nearly 420 million tonnes last September, coal output is likely to see another year-on-year decline this month.

With a growing consensus to reduce output in order to stabilize prices, actual production levels remain subject to market dynamics. Should coal consumption fall more than expected, coal producers may pare back output in line with slower sales, curtailing the release of production capacity following inventory build-up.