Output cut not to cause undersupply on domestic coal market, experts

Despite an output cut of 14 percent in China's largest coal-producing province, experts from the industry have dispelled fears for an undersupply of fuel on the domestic market.

From January to April, north China's Shanxi Province, the country's leading coal production base, reduced raw coal output by nearly 20 million tons compared with the same period of last year. Many fear the reduction may lead to a bottleneck in domestic fuel supply, but experts from Shanxi Provincial Coal Industry Bureau say the current output is basically enough to meet domestic demands, given sustained export declines during the same period.

The coal-rich Shanxi Province exported 12.74 million tons of coal in the first four months of this year, 4.6 percent or 610,000 tons less compared with the same period of last year.

China has reduced the export rebate rate for coal from 11 percent to eight percent starting from May 1, an effort to curb surging exports of resource-based products.

Despite the output cut by coal producers in Shanxi, sources with the local coal industry bureau said the province's coal supply to the nationwide market in the first four months of this year increased by 31 million tons at least.

"China's coal market is well-balanced in general, thanks to the export decline and robust domestic demand," said an official with the bureau on condition of anonymity. "These are enough to offset the output cut."

Raw coal output amounted to 122.91 million tons in the province in the first four months of this year, including 80.46 million tons from the state-owned collieries and 42.45 million tons from private pits.

While the state-owned coal mines in the province registered a rise of 10 million tons in output during the four-month period, the private pits reported a total decrease of 30 million tons, or 41.7 percent, according to the bureau.

Experts with the bureau say many private pits have taken new safety measures at the call of the central government and most overloaded, accident-prone mines have been closed.

According to the local government, Shanxi Province plans to incorporate its 6,500 mines into 50 large mines with annual output of 900,000 tons each and 500 medium-sized mines that turn out 300, 000 to 600,000 tons a year each in the coming three to five years.

Source: Xinhua