31 Oct, 2023
China's coal output growth slows in Q3 2023 amid safety checks, record imports
By Avery Chen and Anna Duquiatan
China's coal production grew 2% year over year to 1.15 billion metric tons in the third quarter of 2023, the smallest quarterly increase since the third quarter of 2021, as authorities ordered safety checks after rising mining accidents, according to an S&P Global Market Intelligence analysis.
The world's biggest coal producer has tightened safety regulations following serious mining accidents in the mining hubs of Shaanxi and Shanxi since August. The number of coal mining accidents in China reversed a yearslong decline after Beijing asked coal miners to boost output in April 2022 to avoid a recurrence of power outages in 2021 and 2022.
Twenty-five coal mine accidents killed 56 people in August and September, according to China Coal Transportation and Distribution (CCTD). China reported 59 coal mining accidents and 166 fatalities in the first three quarters of 2023, according to CCTD.
The stricter safety regulations will have a big impact on coal mining in the second half of 2023, especially in Shaanxi and Inner Mongolia provinces, Yankuang Energy Group Co. Ltd. Chairman Li Wei said on an Oct. 29 earnings call. The company has lowered its annual production target for two mining subsidiaries, Inner Mongolia Mining (Group) Co. Ltd. and Inner Mongolia Haosheng Coal Mining Co. Ltd., to 8 million metric tons from 10 MMt. Li said production might increase during the winter heating season.
The growth of China's coal production and capacity will be limited in 2023 and 2024 as major coal mining hubs are under tighter safety checks and other regions are restricted by poor reserves, Li said.
Import growth losing steam
Despite slowing coal production, high imports will keep coal supplies plentiful, a senior manager of China Coal Energy Co. Ltd. told investors on an Oct. 27 call.
China imported 347.7 MMt of coal in the first three quarters of 2023, up 73% year over year, after Beijing slashed coal import tariffs to zero and lifted a two-year unofficial ban on Australian coal early in 2023, data from Market Intelligence's Global Trade Analytics Suite showed. Imports also got a boost from lower prices and increased purchases of high-calorific coal from Australia and Russia to blend with low-calorific Indonesian coal.
However, the import growth has started to lose steam. China's coal imports increased 36% year over year to 125.7 MMt in the third quarter of 2023, compared with 61% in the first quarter and 40% in the second quarter, according to Market Intelligence data.
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Stocks have been drawn down in coastal provinces due to abundant hydropower supplies and cooler weather, Miao Najue, a CCTD coal analyst, said in an Oct. 25 market briefing. Hydropower generation is expected to continue to grow as southwest China, the country's hydropower hub, receives ample rainfall, according to Miao.
Third-quarter coal imports from Indonesia, China's biggest overseas supplier, fell 5.5% from the second quarter after some small Indonesian miners cut output amid low thermal prices and unfriendly government policies. Tight supplies and growing thermal demand from India will limit Indonesia's coal exports to China, CCTD analysts said, noting that they expect China's coal imports in October to decline month over month.
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