China Wants Coal Production Curbed

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By Esther Tanquintic-Misa | October 15, 2012 8:02 PM EST

China, one of the world's biggest carbon emitters, wants to curb its yearly coal production growth on the existing global weak demand for the commodity as well as dwindling market prices.

Wu Yin, deputy director of the National Energy Administration, during the China International Forum on Coal Industry over the weekend, said the government wants coal output to decrease to an overall below 4 per cent to ensure the sustainability of its coal industry.

"The coal prices' fall to a reasonable level is helpful to solve the contradiction between increasing coal demand for power generation and tight coal supply. However, when the prices drop to a severely low level, it will harm both the coal industry and its downstream industries," he said.

China's coal prices this year have been distressed by less coal demand and increasing hydropower generation. According to figures gathered cqcoal.com, a coal information website in China's major coal trading port Qinghuangdao in Hebei province, coal prices have dropped from 787 yuan ($123) a tonne to 626 yuan a tonne.

Although prices recovered somewhat in September, analysts surmise these may still drop in the fourth quarter because of the large coal stockpiles in power plants and the larger macro economy.

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