[Ferro-Alloys.com]China Daily reported that the central government is asking major coal production regions to keep annual coal output growth below 4% due to shrinking demand and declining prices, in a move to help the industry become sustainable.

Mr Wu Yin deputy director of the National Energy Administration at the China International Forum on Coal Industry said that the government aims to keep the total coal output under 3.65 billion metric tonnes with a growth rate of less than 4%.

According to figures from local governments, the Inner Mongolia autonomous region produced 680 million tonnes of coal during the first 8 months, 11.5% up YoY.

Mr Wu said that China's coal output has seen rapid growth since the beginning of the year, but that coal consumption is slowing down and inventories are increasing, which led to huge prices drop in the past three months.

He said that "The coal prices' fall to a reasonable level is helpful to solve the contradiction between increasing coal demand for power generation and tight coal supply. However, when the prices drop to a severely low level, it will harm both the coal industry and its downstream industries."

Affected by less coal demand and increasing hydropower generation, China's coal prices this year have declined from CNY 787 a tonne to CNY 626 a tonne with a 20% drop from May to August.