China’s coal industry saw reasonably fluctuating prices and increased profitability in 2018, thanks to basically balanced supply and demand, according to a report issued by the China National Coal Association on March 1.

The report estimated China’s supply quality in 2019 will keep improving because of the ongoing supply-side reform that optimizes production capacity structure, while demand is likely to remain stable in 2019 and beyond.

China is likely to consume about 4 billion metric tons of coal annually in the next five years, despite some assumptions that consumption would drop within a few years because of changes in the country’s energy mix, the association said.

“The Chinese economy is developing steadily with a sound upward momentum, which will boost energy needs, and coal demand is estimated to increase for coal-fired power, as electricity is taking a growing share in energy consumption,” said Jiang Zhimin, vice-president of the association.

However, he said the growth rate in coal consumption is slowing because non-fossil energy is replacing coal.

On the supply side, the goal of cutting overcapacity for the 13th Five-Year Plan (2016-2020) has basically been achieved, and the industry is continuously upgrading, resulting in quality coal supplies, said Jiang.

“Large and modern coal mines have become the mainstream in China’s coal production system, and production safety, capacity utilization and transportation efficiency are all improving rapidly, ensuring quality coal supplies,” he said.

Profits of China’s major coal companies rose 5.2 percent year-on-year to 288.82 billion yuan ($43 billion) in 2018. Their revenues from coal business increased 5.5 percent to 2.27 trillion yuan, the report said.

According to the statistics, the overall profits of 90 large-sized coal companies providing to the association, including those from non-coal business, totaled 156.3 billion yuan, a 26.7 percent increase year-on-year in 2018.

The number of coal mines was reduced sharply, down to 5,800 at the end of 2018, and the average production capacity was raised to about 920,000 tons per year.

The top eight coal companies produced 1.49 billion tons of raw coal in 2018, taking up 40.5 percent of national production.

Yearly production capacity of mines making less than 300,000 tons of raw coal per year has reduced to less than 220 million tons.

Moreover, coal production is concentrated in provinces with rich coal resources, and major coal companies in the top eight coal producing regions, including Shanxi and Shaanxi provinces, and the Inner Mongolia autonomous region, produced 3.13 billion tons of raw coal in 2018, taking up 88.1 percent of the national production.

However, Jiang stressed that the coal industry still faces deep-seated problems such as relative overcapacity and imbalanced development.

China produced 3.55 billion tons of raw coal last year, up 5.2 percent year-on-year, according to the National Bureau of Statistics.