China’s Coal and Steel Production Shrink Again as Demand Slumps

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(Bloomberg) — China churned out less coal and steel in September as demand slumped and producers heeded the government’s call to rein in excessive output.

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The nation dug up less coal than last year for a third month after the authorities zeroed in on unsafe and overproducing mines. Steelmaking, another commodity in the crosshairs of Beijing’s anti-involution drive, saw output drop for a fifth month to its lowest since December 2023.

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Coal mined in September fell 1.8% year-on-year to 412 million tons, according to the statistics bureau on Monday, with inspections and flooding in major hubs hindering mining activity. However, the cooler, rainy weather put less pressure on supplies of the fuel, with thermal power generation dropping 5.4% — its first decline in five months — after a 32% jump in hydropower output.

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Coal production could still easily hit another record this year, with output during the first nine months 2% above last year’s level. Steel, though, has fallen 2.9% over the period after dropping 4.6% to 73.5 million tons in September.

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Output of the alloy declined after margins slumped due to a rise in feedstock costs, and demand underwhelmed despite the seasonal upturn in activity after the summer lull. The broader economic data highlighted some of the headwinds to consumption.

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China’s economy slowed for a second straight quarter to grow at the weakest pace in a year. Fixed-asset investment, meanwhile, dropped 0.5% in the first nine months of the year, its first contraction since 2020, while home prices fell more steeply in September.

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Production of other construction materials such as cement and glass continued to sag under the weight of the yearslong property crisis. Aluminum output, however, climbed close to record levels.

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Other energy markets saw expansion, including a 9.4% increase in natural gas production ahead of the winter heating season. Crude oil refining rose 6.8%, with the daily rate at its highest in two years after more teapot refiners restarted units following seasonal maintenance.

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On the Wire

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A pivotal political gathering in Beijing this week could deliver fresh policy measures to extend China’s strongest equity rally in eight years, as investors weigh risks from escalating US trade tensions.

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The names — holmium, europium, ytterbium, thulium, erbium — don’t show up in any of the investing classics. But they’re fast becoming an integral part of the Wall Street lexicon.

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Chinese officials tried to ease concerns over its shock escalation of rare earth curbs while traveling in Washington, attempting to soften an international backlash while trade negotiations with the US proceed.

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China’s exports of rare earth products fell in September from a month earlier, as Beijing’s tighter controls on strategic minerals ripple through global supply chains and heighten tensions with Washington.

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This Week’s Diary

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(All times Beijing)

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Monday, Oct. 20:

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