July 17, 2013 / 7:06 AM / 7 years ago

UPDATE 1-China H1 coal output falls, miners' losses grow -industry

* Coal companies in 6 provinces have sunk into red - CCTD

* Tight credit, weak economy have led miners’ receivables to surge

* Price outlook remains bleak in the second half

By Fayen Wong

SHANGHAI, July 17 (Reuters) - China’s coal output fell 3.7 percent in the first half of 2013, with a sluggish economy piling pressure on miners already seeing a surge in unpaid bills from clients and forcing more miners into the red, an industry portal said.

China is the world’s largest coal producer and consumer. However, a cooling economy, rising hydroelectric power production and Beijing’s push for cleaner fuel is set to keep the market oversupplied and suppress a rebound in local and international prices.

That will, in turn, weigh on profits of global miners such as top steam coal seller Glencore Xstrata Plc and Indonesia’s Bumi Resources.

Total coal production for the first six months of the year stood at 1.79 billion tonnes, down 68 million tonnes from year ago, with 16 provinces posting declines, the China Coal Transport and Distribution Association (CCTD) said on Wednesday.

“Most of the state-owned coal mines ramped up output ... but many regional and private mines have either stopped production or trimmed output,” CCTD said on its website.

It added that total output from private mines between January-May fell by 13.9 percent from year ago.

The persistent fall in domestic coal prices has also forced many Chinese miners into the red, as they struggle with rising labour costs and transportation fees.

As many as 26 large coal companies are losing money and have chalked up combined losses of 4.66 billion yuan ($759.58 million) in the first half, CCTD said.

Tight credit and a sluggish economy are also forcing Chinese companies to leave their bills unpaid, resulting in a surge in coal miners’ accounts receivable.

“Total accounts receivable for the coal sector rose by 10 billion yuan ($1.63 billion) this year,” CCTD said.

Total amount owed to 80 monitored large coal firms reached 320.6 billion yuan in the first five months of the year, an increase of about 22 percent from year ago.

Coal companies in six provinces - Heilongjiang, Jilin, Chongqing, Sichuan, Yunan and Anhui - have sunk into the red, the association said.

China’s thermal coal costs range between $80-$100 per tonne, with transportation costs weighing on many miners located inland, which also tend to have poorer coal quality.

Apart from weak demand at home, Chinese coal prices are also impacted by a flood of cheaper imports from Indonesia, Australia and South Africa. Imports have risen 13.3 percent in the first six months of the year.

Total coal consumption in the first six months of the year was 1.93 billion tonnes, up 1.8 percent from year ago, data from CCTD showed. The gain was 1 percentage point lower than in 2012 and down 7.6 percentage points from 2011.

“The market is unlikely to rebound in the second half. Although consumption is expected to rise modestly in the second half, rising production, growing imports and hydro-power generation will keep the market oversupplied,” CCTD said.

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