According to Italian maritime brokerage house Banchero Costa’s China coal outlook report, coal production in China, the world’s largest producer of coal, appears to have peaked in 2013, with output reported to be declining each year ever since. In 2016, China’s total output of raw coal fell 9.4 percent year on year to 3.4 billion mt, according to figures from the country’s National Bureau of Statistics.
The Banchero Costa report said that government measures to reduce coal production at Chinese mines by 54 days, down from 330 to 276 days a year, and moves to force miners to comply with production limits, led to a sharp fall in domestic coal production in 2016. As coal prices shot up due to a supply-demand gap, China scrambled to ease some of the limits and boost output ahead of peak winter demand. However, China’s National Development and Reform Commission (NDRC) is said to be considering a reinstatement of output restrictions around mid-March, to avoid the return of a glut after the heating season ends.
At the start of the year, the NDRC had announced that 800 million mt of outdated and inefficient annual coal capacity would be cut by 2020. The Chinese government has also maintained its stance on reducing coal production, although there has been talk recently that the 2017 coal production cut target may be reduced to 50 million mt, compared to the 250 million mt target set in 2016, as the scale-back of coal production becomes increasing challenging due to rising prices and concerns over lost jobs.