China churned out 327 million tonnes of coal in June, down 4.9 percent from the same period last year, despite rising seasonal power demand, with major producers slashing output to minimise losses, data from the country's statistics bureau showed.
Production in the first six months reached 1.789 billion tonnes, down 5.8 percent compared with the same period in 2014, the National Bureau of Statistics said.
Coking coal production in June also fell 6.9 percent on the year to 38.38 million tonnes.
Beijing has been trying to ease its dependence on coal and encourage new sources of energy as part of its war on pollution, but it is the economic downturn that has had the biggest impact on the sector, with supply outstripping demand and prices down more than 20 percent so far this year.
China has been urging producers to curb coal output in a bid to support prices, but new capacity continues to go into operation, with local governments remaining reluctant to take on a sector that employs 5.9 million people and provides huge amounts of revenue.
So far, the arrival of the summer - usually accompanied by a surge in power consumption as air conditioners are switched on - appears to have had some impact on coal demand, but demand remains weak compared to last year.
Coal imports rose 16.5 percent on the month in June, but they were still down 34 percent on the year.
According to Helen Lau, analyst with Argonaut Securities in Hong Kong, many domestic miners in the provinces of Inner Mongolia and Shanxi have cut back production because prices at Chinese ports are now even lower than those on the spot market. The drop in supplies caused the month-on-month increase in import volumes.
"But the Chinese coal price has not gone up at all, meaning that even though imports of coal increased a little, overall demand remains very, very weak," she said.
Power generation volumes reached 474.5 billion kilowatt-hours (kWh) in June, up 0.6 percent compared to the same period of last year, but thermal power output was actually down 5.8 percent, with grid companies taking advantage of the 16.4 percent increase in hydropower over the period, which eased their reliance on coal-fired plants.
Industrial demand for coal has also remained low, with cement production down 5.8 percent in June and crude steel output also falling 0.8 percent compared to last year.
Spot coal prices in the port of Qinhuangdao SH-QHA-TRMCOAL have remained unchanged at 415 yuan ($66.84) per tonne since early June. The Shenhua Group, China's top coal producer, also said that it would keep prices unchanged over July in the face of weak demand.http://www.reuters.com/article/2015/07/15/china-economy-output-coal-idUSL4N0ZV1FX20150715