中文
There's market talk that top coking coal producer in Shanxi plans to arrange production as per sales, which raised concerns among some participants about whether this could lead to reduced production at mines.
The authenticity of the talk, which seems to be possible given the current weakness in coking coal and coke markets, can't be confirmed immediately. Sxcoal learned the miner did slowed production in May in reponse to mounted inventories at mines.
One source noted coal production of the group could have improved again following the rise in prices of the steelmaking material in recent weeks.
Nevertheless, several factors may support Shanxi to maintain high coal output this year, mainly from official stances of the provincial government.
Earlier this year, senior officials said in a number of occasions, including the provincial government work report, that the province aimed to produce 1.365 billion tonnes of coal in 2023 through accelerated release of advanced mining capacities while ensuring production safety. That would represent a year-on-year growth of 4.4% compared to the actual output last year.
Official statistics showed the province produced 444 million tonnes during the first four months, realizing a year-on-year rise of 4.6%. The year-to-date output is generally on track to achieve the provincial government's target, which may become less likely to fulfill should any large reduction occur.
There's also concerns over production decline in June, a month of safe production nationwide set by the government. Historical data, however, indicated limited impact on raw coal production in Shanxi during the month.
On June 6, the Shanxi government urged coal companies to complete supply guarantee campaign in the first half year, in order to lay a solid foundation for finishing the whole-year production target.
While coal prices have seen substantial declines so far this year, the current levels are still higher than the average of the past years and above majority miners' production cost. With reasonable profits, miners may not have the impulse to reduce production.
Since coal is the basic energy product for the nation, lower coal prices would help reduce energy costs and enhance profitability, especially for industries like steel, cement, logistics and chemical.
Overall, it could be less likely for miners to reduce output voluntarily while still being able to secure comfortable profit. In this regard, we may continue to coal production to stay at relatively high level in Shanxi.
(Writing by Rebecca Liu Editing by Harry Huo)
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