China's coal output in December kept growing for the sixth month in a row and remained above year-ago level, but still insufficient to solve a shortage that has led to sharp rise in spot prices.
China produced 351.89 million tonnes of coal in December, a 3.2% rise compared with December 2019 and up 1.33% compared with 347.27 million tonnes in November, according to data from the National Bureau of Statistics (NBS). This helped ramp the full-year output up by 0.9% from 2019 to 3.84 billion tonnes, with growth in the second half year offsetting the decline in the first half caused by the pandemic.
Despite calls by Beijing for state-owned mining groups to raise output, coal production didn't see a remarkable improvement in December, with the daily output averaging 11.35 million tonnes, 230,000 tonnes lower than that in November. Obviously, large coal groups had to carefully maintain a balance between production and safety, and many of them were already running near their limits, with little room to increase further.
Hit by a couple of cold snaps, many areas of China reported a surge in power and heating demand in December. Several provinces including Hunan and Jiangxi had to ration power use as supply couldn't catch up demand, even though utilities and heating plants were taking an all-out effort to boost supply.
Many utilities have been competing for limited coal supplies. This intensified supply crunch, sending spot prices soaring above the government preferred trading band of 500-570 yuan/t. As of January 15, some cargoes of 5,500 Kcal/kg NAR thermal coal were already traded above 1,000 yuan/t FOB at northern major trading ports, a new high since 2008.
To cushion domestic shortage, the Chinese government completely cancelled restrictions on coal imports (except from Australia) in mid-December. Coal imports have increased dramatically since then, most of which came from Indonesia as well as Russia.
China imported 39.08 million tonnes of coal in December, dwarfing only 2.77 million tonnes in December 2019, data from the General Administration of Customs (GAC) showed on January 14. It was also 234.8% higher than 11.67 million tonnes in November. Full-year coal imports reached a new high of 303.99 million tonnes since 2014, up 1.5% from 2019.
(Writing by Alex Guo Editing by Harry Huo)
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