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UPDATE 2-China coal miners boost output, but consumption rises as winter nears
December 13, 2016 / 2:51 AM / 8 months ago

UPDATE 2-China coal miners boost output, but consumption rises as winter nears

* China coal output on track for 3rd annual drop in 2016

* Power demand in Nov at fastest in years

* Utilities' buying slows - analysts (Recasts, adds details throughout)

By Meng Meng and Josephine Mason

BEIJING, Dec 13 (Reuters) - China's coal miners ramped up output in November, but production was still down year-on-year and power consumption rose at its fastest pace in years, underlining the government's difficulties as it tries to avert a winter energy crisis.

The data was the strongest sign yet that miners are struggling to comply with government orders to crank out more thermal coal supplies for the power sector ahead of the busiest and coldest months of the year.

Production in November fell to 308.1 million tonnes, up 9 percent from October, but still down 5.1 percent from a year ago, the National Bureau of Statistics data showed.

The pace of output cuts year-on-year slowed compared with double-digit percentage drops since March and analysts expect data to register a rise in December, the first in at least 18 months, as fresh supplies hit the market.

But the data surprised some market followers after a senior industry executive on Monday said output had grown month-on-month and year-on-year and after a series of emergency measures by the government to boost output.

Mining executives say increasing capacity or reopening idled mines has been slow, particularly for smaller companies, as they have to rehire workers and refurbish equipment.

"Production is recovering very slowly towards the year-end," said a Shaanxi Yulin based coal executive, adding that it takes a long time to reopen a small mine.

Separate data on Tuesday showed monthly power consumption rose 9 percent in November on a year earlier, the fastest pace since February 2014.

The jump is partly due a vicious cold snap that gripped northern China early last month and better-than-expected manufacturing levels.

Still, the combined numbers illustrate the task facing Beijing as it scrambles to replenish supplies ahead of the cold winter months and quell a months-long rally in prices, which have doubled since May.

Some of the steps taken reversed major policies introduced earlier this year aimed at tackling a glut and cutting the world's top energy market's dependence on fossil fuels by closing mines and limiting the number of operating days.

POWER DRIVE

Forecasts of warmer-than-usual weather during the upcoming peak demand winter heating days may offer some relief to power companies, and the government.

Electricity producers have slowed their purchases this month suggesting greater comfort with inventories after scrambling to restock, analysts said.

Average stocks at the six largest utilities were 18.6 days by Dec. 9down 1.2 days from the same period last month, data collected by Fenwei Energy showed.

While on the surface falling inventories would be alarming, the Fenwei Energy analysts said in a note it suggests "downstream users are being cautious with purchases. The market has obviously cooled down."

China's year-to-date output was down 10 percent at 3.05 billion tonnes, putting it on track for lower annual production for a third year in a row as its effort to shift to cleaner, renewable fuels takes effect. The government has also closed illegal privately owned mines.

Output of coke, a key ingredient in steelmaking, rose by 5.7 percent from a year earlier to 38.8 million tonnes in November. For the year-to-date, output was down 0.2 percent at 410.53 million tonnes.

additional reporting by Beijing newsroom and Henning Gloystein in SINGAPORE; Editing by Richard Pullin

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