China's coal consumption is projected to decline in the second quarter of a year ago, but will see an increase in the second half of 2020 as Beijing's stimulus measures fuel demand, said the industry body on Thursday.
The China National Coal Association said that industrial and economic activities are unlikely to be completely restarted in the current quarter due to coronavirus control measures that would weigh on demand for coal.
"The fall in coal consumption will be reduced in the second quarter, but the market oversupply situation will not improve and the downward pressure on coal prices will increase," the association said in a survey.
Since Sunday, the Chinese authorities have reported dozens of new coronavirus cases and reclassified the town in the northeastern province of Jilin as a high-risk, stoking fear of a new wave of infections.
The world's largest coal user used about 870 million tons of fuel in the first quarter , down 6.8 percent from the same time last year, according to the survey.
The coal consumption of the power sector decreased by 6.8% to 507 million tonnes, while that of the building sector dropped by 24.7% to 65 million tonnes.
Coal production, however, dropped to 830 million tons in the first three months of the year by just 0.5 per cent, as mining firms boosted their output in response to Beijing 's demand for fuel supplies.
The price of benchmark thermal coal with an energy content of 5,500 kilocalories per kg was 481 yuan ($67.78) per tonne on Wednesday, below the "green zone" price set by the state planner of 500-570 yuan.
The coal association also warned of the replacement of coal-fired power with non-fossil fuel sources in the second quarter, as that rainfall in southern China would improve the generation of hydropower.
“In the second half of the year, total coal consumption will see improvement from the first six months as China will implement the policies to boost domestic demand and bring industrial and economic growth to a normal level,” said the coal association, without giving detailed numbers in the estimation.
The National Development and Reform Commission announced on Wednesday that the country will strongly expand domestic demand and increase investment in both traditional and new infrastructure projects.
