Quantity over quality: China faces power supply risk despite coal output surge

The world's top coal consumer relies on coal for 60% of its electricity

China could face further power shortages this summer despite taking drastic measures to boost coal production, as much of the new supply is of lower quality than before and burns more quickly in power stations, traders and analysts told, Qazet.az reports.

The world's top coal consumer relies on coal for 60% of its electricity. Last year, lower domestic coal production led to a weeks-long power crunch that hit manufacturing across the world's No. 2 economy.

Beijing has since ordered a ramp-up in coal output to record levels, and capped coal prices to ensure they are affordable for power generators.

But traders say the price cap is encouraging miners to prioritise coal quantity over quality, leaving power generators needing growing volumes of coal as they look to raise output.

"For miners, they don't have much incentive to produce high quality coal as margins are so low due to the price caps. Their priority is to churn out enough volume of coal to fulfil the targets set by government," said a China-based coal trader.