October 27, 2017 / 12:02 PM / 2 years ago

REFILE-China Shenhua's quarterly profits near double as coal prices soar

(Refiles to correct date to Oct 27)

BEIJING, Oct 27 (Reuters) - Profits at China’s biggest listed coal producer, China Shenhua Energy , nearly doubled in the third quarter amid a surge in coal prices and strong demand.

The results, announced on Friday, are the first since the company’s parent, Shenhua Group Corp Ltd, in August announced plans to buy the country’s top utilities China Guodian Corp, China’s latest state-orchestrated tie-up.

After the merger, Shenhua’s coal-fired power assets will combine with those of Guodian’s GD Power unit in a new subsidiary that will including 40 plants across China’s major regions.

Shenhua reported a net profit of 14.3 billion yuan ($2.15 billion) for July-September, compared to 7.5 billion yuan in same period last year, according to Reuters calculation using company data.

Its revenue rose 34.59 percent to 62 billion yuan a tonne.

Government-enforced cuts to mining production in China have squeezed supply of coal and triggered a price rally.

Shenhua Energy produced 69.6 million tonnes of coal in the third quarter, down 5.4 percent from a year ago as Beijing stepped up environmental and safety inspections to improve mining and curb pollution.

Shenhua said in a previous earnings report that it had reduced its 2017 commercial coal output target to 278 million tonnes and its sales target to 396 million tonnes.

Thermal coal prices on the Zhengzhou Commodity Exchange rose 12.5 percent in the third quarter and touched a record high of 658.6 yuan a tonne in mid-September.

Shenhua’s coal sales rose 5.8 percent in the third quarter to 107.8 million tonnes.

“In the fourth quarter, Shenhua expects an increase in coal demand as it is typically the peak period of coal usage for heating in the northern part of China,” the company said in its earnings report.

$1 = 6.6505 Chinese yuan renminbi Reporting by Muyu Xu and Josephine Mason; Editing by Susan Fenton

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