Restructuring fuels rise in coal stockpiles, cuts prices

Coal producers have cut prices in an attempt to attract buyers.

Shenhua Group Corp Ltd, the nation's largest producer of the fuel, cut standard thermal coal prices by 12 yuan ($1.98) a ton to 602 yuan a ton in late January, its second price cut this year.

According to the China National Coal Association, the industry had a total loss of 40.55 billion yuan for the first 11 months of 2013.

"Coal producers are facing a situation even worse than last year," said Liu.

She said environmental issues have been a longstanding problem for the coal industry.

The government continues to pursue policies to rein in energy-intensive industries, which are all big coal buyers, to cut emissions and save energy.

To reduce air pollution, the central government has set a target of eliminating 80 million tons of steel capacity within five years, which will lead to a reduction of coal consumption, said Xing.

Given that coal fuels so many industries, weak demand for the fuel also portends a slowing economy.

"The overall demand will stay huge, but the high growth rates for coal consumption are over," he said.

"The only exception may be if the weather turns extremely cold this year. It might be a driver for coal use. Otherwise, the coal market will continue to experience excessive supply this year with low prices."

He forecast that domestic coal consumption this year will be flat with 2013, staying at 3.6 billion tons to 3.7 billion tons.