JAKARTA: The reason why coal production in China has fallen and thus there exists more demand for coal imports is that Chinese authorities have been eager to curtail coal production as it strives to meet environmental accords. The world’s second-largest economy (as well as the world’s second-largest greenhouse gas emitter after the United States) cut the annual statutory working days for coalmines from 330 to 276 days in order to ease the structural overcapacity. Meanwhile, the winter heating season should give a boost to electricity demand, thus boosting coal demand.
However, on the long term, there still exists plenty of pessimism about the trend of coal prices due to the global supply glut. Although China is now trying to combat a supply glut, it will be increasingly difficult for the country to limit coal production when coal miners’ profit margins continue to improve. Moreover, nations around the globe are more and more trying to cut their emissions, implying that the use of coal for power generation is becoming less popular. Instead, nations are increasingly focusing environmentally friendly energy sources.
