In a recent report, the Inner Mongolia Autonomous Region Coal Industry Bureau revealed that as of the end of June, 67 coal mines in the region had ceased operations, representing 20.2% of total coal mine production. This significant decline in operational capacity has raised concerns about the sector’s stability and future outlook.
According to data from the National Development and Reform Commission, coal production and sales across provinces from January to July showed a mixed trend. In July alone, production in Inner Mongolia surged compared to previous months, reaching 515 million tons—a decrease of 8.2% year-on-year. Sales also declined, with 530 million tons sold during the same period, down 8% from the previous year.
Coal prices have also taken a hit. The pit price for 5,500 kcal thermal coal in Inner Mongolia dropped from around RMB 405 per ton at the start of the year to RMB 310 per ton on September 9, marking a reduction of RMB 100 per ton over three quarters—a 25% drop overall.
Analysts attribute this downward trend to several factors, including the ongoing economic slowdown, weak demand growth, overcapacity, high inventory levels, and continued competition from imported coal. These pressures have led to sustained price declines across the industry.
An internal report from Shenhua Group, obtained by a reporter, highlights the financial challenges faced by coal companies. When 5,500 kcal thermal coal prices fell to between RMB 570 and 580 per ton, major players like Shenhua, China Coal Pingyi, and Yitai still managed to maintain a profit margin of over 100 yuan per ton. Even large-scale mines in the Mengxi region maintained a modest profit of 10 to 40 yuan per ton. Despite the price slump, these companies continue to increase production, hoping to "make up for the losses" through volume rather than price.
With the market showing no immediate signs of recovery, the coal industry in Inner Mongolia is facing a tough road ahead, balancing profitability with the need to remain competitive in an increasingly challenging environment.
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