July 20, 2015 / 10:11 AM / 5 years ago

China's Shenhua says June coal sales down 22 percent on year

BEIJING (Reuters) - China Shenhua Energy Co Ltd said on Monday that its June coal sales fell 22.2 percent from a year earlier to 37.2 million tonnes, hit by weak prices and low demand.

Total output from its mines fell 10.9 percent on the year to 22.9 million tonnes last month, the nation’s biggest coal producer said in a statement to the Hong Kong stock exchange.

Sales were up 1.6 percent compared with May, largely as a result of seasonal increases in power demand, but output was down 5.4 percent, with the firm deliberately cutting deliveries in order to avoid losses.

China’s coal sector has been hurt by chronic overcapacity and a slowdown in demand brought about by the country’s “war on pollution” as well as a downturn in key industrial sectors like steel, power and cement.

Overall power output rose 0.46 percent in June, but thermal power dipped 5.8 percent on the year, with grid firms taking on more supply from cleaner power sources. Its share of total power generation fell to 70.9 percent from 75.5 percent in the previous month. [O/CNPOWER]

Nationwide coal output dropped 4.9 percent in June to 327 million tonnes, with production in the first six months falling 5.8 percent to 327 million tonnes.

The Chinese government has urged miners to restrain output in order to shore up prices. Shenhua itself cut production by 9.9 percent in the first half of the year to 116.5 million tonnes, but its efforts have had little impact on the market.

The firm was forced to slash some of its coal prices for July, even though demand for the fuel normally rises over the month as temperatures throughout the country soar and air conditioning units are switched on.

The price of 5,500-kilocalorie thermal coal at the port of Qinhuangdao has remained unchanged at 415 yuan ($66.83) per tonne since early June, and is down 20 percent since the beginning of the year.

Reporting by David Stanway; Editing by Subhranshu Sahu

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