By Irina Slav of OilPrice.com

Coal production in China rose by 4.4% in the year last month to a total 414.46 million tons, government data showed.

The production rate also rose on the month: the August total stood at 396.55 million tons.

The increase followed the end of safety inspections in coal-producing regions and the return of coal-to-chemicals capacity to normal operation after maintenance, Reuters reported.

“Following the end of maintenance on some coal-based methanol, urea, PVC and other chemical capacity, the capacity utilisation rate has gradually increased,” Reuters quoted analysts with Galaxy Futures, a China-based financial services firm, as saying.

Coal production over the first nine months of the year, however, only increased marginally, by 0.6%, to a total of 3.48 billion tons. The output was no doubt affected by safety probes that resulted in substantial reduction in accidents and deaths in coal mines.

Demand for coal was coming mostly from the power generation sector, where coal continues to be king, and heavy industry. Coal-power generation in China rose by 8.9% in September on an annual basis, reaching 545.1 billion kWh, the state statistics agency said.

China’s coal imports also rose in September, to a total of 47.59 million metric tons of coal, a 13% increase from September 2023. The increase in imports was largely driven by a favorable arbitrage between foreign and domestic supply.

The Asian benchmark of coal prices, at Newcastle in Australia, were falling for most of last month. The lowest level in September, at $136.46 per metric ton on September 23, was a 7% decline from the August high of $147.13 per ton, according to Reuters estimates.

Coal accounts for about 60% of China’s generation, despite a surge in hydropower earlier this year after abundant rainfall, which reduced the share of coal in the country’s energy mix. Natural gas, in contrast, accounts for less than 10% of generation.