China’s declining oil and coal output signals more imports

The mainland’s crude output dropped 4.6 per cent to 101.59 million tonnes in the first six months of the year, the lowest for that period since 2012, according to the National Bureau of Statistics.

Coal production fell 9.7 per cent to 1.63 billion tonnes in the first half. For June, crude tumbled 8.9 per cent, coal fell 16.6 per cent and natural gas slipped 0.5 per cent. Ethylene output also decreased to the lowest in a year, to 1.39 million tonnes.

The cutbacks highlight cost and environmental pressures as the economy shifts towards consumer-driven growth and away from industrial production. Oil producers including PetroChina and Cnooc shut unprofitable fields amid a price crash and took advantage of cheaper overseas supplies.

Meanwhile, coal output has slipped as the government compels miners to reduce an overcapacity in the biggest producer and consumer of the fuel.

“The nation’s reduction in domestic oil and coal output last month have been larger than expected,” said Tian Miao, an analyst with policy researcher North Square Blue Oak. “Ample, cheap overseas resources have made the government more comfortable with deep cuts to high-cost local supplies.”