China to avoid radical coal shift after 2016 turmoil

- Reuters, BEIJING

Mar 8, 2017-

China will not force coal mines to cut output on a large scale if prices remain stable, the government said on Tuesday, a sign Beijing may try to avoid radical policy shifts after the upheaval caused by efforts last year to tackle excess capacity.

In a statement, the National Development and Reform Commission (NDRC) said provincial governments and relevant agencies would be free to decide whether to implement cutbacks at inefficient mines.

As long as prices remain within the current range, the national economic state planner said it will be satisfied with market conditions and will not introduce any broader cuts. 

Analysts and experts said the flexible tone reflected a more cautious approach to policymaking after drastic limits to miners’ operating rates last year pushed the nation to the brink of a winter heating crisis. 

“NDRC is unlikely to introduce any form of output cut, as it caused too much turbulence to the market last year,” said Zhang Wuzong, president of Shiheng Special Steel Group in Shandong, on the sidelines of parliament’s annual meeting.

The government’s challenge is to ensure utilities—the main consumers of thermal coal—and miners are still profitable, to protect millions of jobs and power supplies for the world’s largest population.

China accounts for half of global thermal coal demand, with the majority of its power plants using thermal coal as fuel. 

In April last year, Beijing restricted the number of days miners could operate each year to 276 from 330 days to help get rid of chronic oversupply and cut the use of dirty fuel and shift to renewable energy like wind.

Published: 08-03-2017 09:11

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