Profit of China's largest coal producer falls 9.9%

China Shenhua Energy, the country's largest coal producer, posted a decline in first-quarter net profit compared with a year earlier, citing falling coal prices. Net profit went down 9.9 percent to 10.4 billion yuan (about 1.66 billion U.S. dollars) in the first three months, said a report on the website of the Shenzhen Stock Exchange on Saturday. During the January-March period, Shenhua Energy's revenue dipped 0.1 percent on an annual basis to 60.9 billion yuan, it added. The Beijing-based company attributed the poor performance mainly to rising production costs and falling coal prices. While the cost of producing every tonne of coal increased 4.6 percent on an annual basis to 127.8 yuan, the Bohai-Rim Steam-Coal Price Index, a key indicator of coal prices in China, plummeted from 631 yuan per tonne at the end of last year to 530 yuan at the end of March, down by 16 percent. In addition to weak demand, the company also blamed growing coal imports, which rose 5.1 percent to 84 million tonnes in the first quarter. The coal producer painted a gloomy picture for the coal-making industry in the second quarter of this year, due to weaker demand, and the government's drive to readjust energy structure to cleaner fuels. However, Shenhua Energy expects the coal market to be more balanced as the government would accelerate steps to reduce overcapacity in coal production and the price advantage of imported coal is set to weaken.