China's coal production fell 3.5 percent to 3.68 billion tonnes in 2015, official data showed on Tuesday, as waning demand and a drive by authorities to curb fossil fuel use forced many firms to cut back operations. Output in December alone, normally a peak month for coal use as temperatures plunge, fell 0.3 percent compared to the same month a year earlier, according to data from the National Bureau of Statistics.
China's coal industry is struggling with a huge supply glut that has sapped prices and forced many mines to shut. Key coal-consuming industries like steel and power also experienced declines in 2015, with crude steel production falling 2.3 percent over the year and power generation dipping 0.2 percent. Cement production, another important coal consuming sector, also fell 4.9 percent in 2015, following a downturn in construction activity.
Beijing has urged coal producers to control output and it has also banned new project approvals, but the move is unlikely to have any immediate impact on the market, which has seen prices fall by a third since the beginning of last year. Senior officials at the China National Coal Association have said that despite the current economic downturn, overall coal demand will increase over the long-term before peaking in the middle of the next decade.
But Carlos Fernandez Alvarez, coal analyst at the International Energy Agency, said at a meeting in Beijing last week that coal consumption in China had already peaked. Environmental groups have urged the Chinese government to include an explicit 2020 coal consumption cap in its latest five-year plan, due to be published later this year.
The Natural Resources Defense Council, a US-based group, has urged China to set the cap at 4 billion tonnes and to cut the figure to 3.5 billion tonnes by 2030. The production of coking coal, used in steelmaking, also fell 6.5 percent over 2015 to 447.78 million tonnes, NBS data showed.