Winter is coming: China scrambles to boost coal output after production cuts work ‘too well’

China’s efforts to shrink its bloated coal industry may have worked too well, too quickly.

Prices have surged more than 50 per cent this year after the government ordered mining companies to cut output to ease a glut and help lift the industry out of crisis.

Now, as winter looms and fuel demand peaks, the consumer and producer of about half the world’s coal is having to relax some of those controls, or face even higher fuel costs, according to analysts at Citigroup and ICIS China, as well as the China Coal Transport and Distribution Association.

“The extent of the production cuts earlier this year has been too severe,” said David Fang, a director at association.

“Now the government is trying to fix the problem by relaxing some controls on output, but there is only limited time now before the winter arrives.”