China’s coal industry is currently experiencing an oversupply, leading to increased stockpiles after a significant expansion in production, reported Reuters, citing sources.
Despite having the world’s largest thermal power fleet, China is producing more coal than it can consume, resulting in a 42% year-on-year (YoY) increase in mine stockpiles and a 25% annual rise in inventories at northern Bohai area ports.
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This expansion was a response to the energy shortages and blackouts that occurred in 2021.
According to the report, power plants are being encouraged to purchase coal from these northern ports to help reduce the high stockpile levels and support miners, according to three sources.
These directives from the National Development and Reform Commission come after persistent appeals from industry groups and companies to cut back on coal imports and production.
Despite record imports of 542.7 million tonnes of coal in 2024, coal imports have decreased by 16% in April compared with the previous year, the report said.
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By GlobalDataChinese coal production continues to rise, with a 6.6% increase from January to April, reaching 1.58 billion tonnes.
This growth persists even as industry profits have plummeted by 48.9% YoY for the same period, as shown by official data.
Moreover, the price of medium-grade coal has been on a downward trend, reaching 620 yuan ($86) per tonne, the lowest mark since March 2021.
This decline has led some buyers to attempt to renegotiate long-term contracts in favour of more advantageous spot sales.
Furthermore, China has temporarily lifted its ban on the export of rare earth elements and other dual-use items to 28 US companies.
This suspension, which will last for 90 days, is part of a broader trade détente with the US and could signal a relaxation of economic tensions between the two nations.
