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China's April coal output leaps 11% on year, but demand downturn looms

BEIJING (Reuters) - China's daily coal output in April jumped 11% from the same month a year earlier, boosted by Beijing's order to increase supply to ensure security of the country's energy supply, but the volume dropped from a record high set in March.

The immediate outlook for demand is not strong, however.

China, the world's top coal producer, mined 362.8 million tonnes of the fuel last month, data from the National Bureau of Statistics showed on Monday, equivalent to 12.09 million tonnes per day.

That compares with the record of 12.77 million tonnes per day in March and 10.74 million tonnes per day a year before.

Production over the January-April period was 1.45 billion tonnes, also 11% higher than in the same period a year earlier, the bureau's data showed.

China is aiming at lifting daily coal output above 12.6 million tonnes and building a national inventory of 620 million tonnes to ensure it has sufficient supply.

The government has also urged regions that largely rely on imported coal to sign more contracts of at least a year's duration with domestic coal producers, to secure supply.

China's central bank said that, to support more output, it had allocated an additional 100 billion yuan ($14.7 billion) of loans dedicated to coal production, storage and purchases by power plants.

Beijing has also set price caps for thermal coal under spot trade and term contracts to ease inflation pressures and balance profits between coal miners and utilities.

However, lean demand from downstream sectors, following a wide range of industrial plant shutdowns because of COVID-19 outbreaks, could weigh on further growth of coal output.

China's April power generation plunged to a level last seen in May 2020, with thermal power output dropping 12% from a year before.

Coal inventories at utilities in eight Chinese coastal regions reached 29.66 million tonnes by May 7, 25% higher than the same period last year, data tracked by China Coal Transportation and Distribution showed.

($1 = 6.7928 Chinese yuan renminbi)

(Reporting by Muyu Xu and Dominique Patton; Editing by Kenneth Maxwell and Bradley Perrett)

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