China's coal production down 30% in September

China’s coal production down 30% in September

The first impacts of China's State Administration of Work Safety's announcement that it would suspend production at 8'000 coal mines began to show in September as domestic coal production declined 30 percent month-on-month. In June 2005, the State Administration of Work Safety released a list of 8'648 coal mines which will have their production suspended so that inspections can be carried out. On September 26, the head of the State Administration of Work Safety, Mr. Li Yizhong, indicated that 8'000 coal mines should be suspended for checkups no later than the end of 2005. According to the latest statistics from China Coal Transport and Distribution Association (CCTD), coal output for the first nine months of the year was 1.43 billion tons. September alone accounted for only 125 million tons, a noticeable decline from June (187 million), July (179 million) and August (186 million). Some experts predict that coal production capacity in 2005 will decrease 50 to 70 million tons, with a further reduction of 100 million tons in 2006. China's demand for coal in 2005 will be around 2 billion tons, which means that the decreased volume represents anywhere from 2.5 to 5 percent of total demand. Therefore, the coal market is likely to have a short supply. Since late September, coal prices in northeastern China have been on the rise. Market prices of some coal varieties in the Shaanxi Yulin region rose to RMB 300/ton ($37).