UPDATE 2-China H1 coal output jumps, but shortage remains

By Jim Bai

BEIJING, July 17 (Reuters) - China's coal output jumped 11 percent in the first half, but the country still faces a shortage on surging demand, and as exporters take advantage of high international prices.

The lack of coal, used for four-fifths of power output, is pushing China towards its worst summer power shortages since a crisis in 2004 that saw rolling blackouts around the country.

China is short around 40 million tonnes of coal, Wu Chenghou, an adviser to China Coal Sales and Distribution Association, said on Thursday, equivalent to around 6 days output in the world's top coal consumer and producer.

In the first half of the year, China's raw coal output jumped 11.1 percent to 1.239 billion tonnes, said Wang Zhanjun, vice president of China Coal Transport and Distribution Association, told an industry seminar.

"China is facing mounting pressure to ensure coal supply to power plants when the country prepares for Olympics and continues its construction efforts after ice storm and earthquake," Wang said.

Unlike the crunch in 2004, when insufficient power capacity caused the worst shortages in decades, the squeeze this time is due to coal shortages and generators' reluctance to build big stockpiles given soaring coal prices and Beijing's cap on electricity tariffs.

As of July 11, coal stocks at 541 major power plants connected to the state grid were at 34.78 million tonnes, enough for generation for 10-11 days, while stocks in 198 of these plants can barely cover a week's use, Chinese media said on Thursday. [ID:nPEK222565]

The world's second-largest electricity user is rationing power in at least 14 provinces, with estimated shortfall near 30 gigawatts, or 4.2 percent of the country's installed generation capacity.