China is seeking to increase coal production in its main coal-producing province to strengthen its local economy affected by the drop in production at the beginning of the year. Shanxi province, which suffered a significant reduction in production in the first quarter, plans to increase its production levels in June.
Why did coal production decrease in Shanxi?
This decrease was due to increased control over safety practices following several fatal accidents, reducing production by 25% and affecting the provincial GDP. According to Bloomberg According to Bloomberg, Shanxi dropped to 31st place in economic growth among Chinese provinces.
The authorities ordered a partial halt to production and safety inspections between March and May, significantly impacting the economy of Shanxi, which contributes about 29% of Shanxi’s coal of the country’s coal.
As a result, coal imports, both coking and thermal, have increased last year, reaching record levels and are expected to continue to rise for the remainder of the year. The local supply of coking coal, essential for steelmaking, has been most affected by these restrictions.
Despite strong demand for both types of coal, demand for thermal coal has decreased recently due to increased hydroelectric production. This increased by 42.9% in the last third of April compared to the same period last year and is expected to maintain double-digit growth. This trend contrasts with last year, when drought and lack of rainfall increased the use of coal. for electricity generation, as wind and solar energy could not meet all the demand.
China boosts coal and bets on renewables
The crisis in China’s real estate sector has kept the steel industry in low demand, thus mitigating the shortage of coking coal. However, recent government efforts to revitalize the real estate sector could increase the demand for steel and thus the need for coal.
At the same time, China has increased its coal imports this year, seeking to accumulate reserves for power plants for the summer, taking advantage of the fact that international prices have been half of the levels recorded in the same period last year.
To diversify its energy matrix and reduce dependence on coal, China is investing heavily in renewable energy. Numerous solar and wind power projects are being developed in several provinces, with the aim of increasing installed capacity and achieving the emission reduction targets set for 2030.
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Source: worldenergytrade
Photo: Shutterstock
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