China fires up its furnaces while diggers and oil drills slow

China may be mining less coal and pumping less crude but it’s processing more raw materials than ever in its mills, refineries and smelters.

Cost pressures and environmental regulation curbed domestic crude and coal output last year while economic stimulus propelled steel making, aluminum smelting and oil refining to record levels. The outlook for 2017 depends on the pace of supply-side reforms aimed at shifting away from heavy industry to a consumer-led economy, according to Susan Gao, head of consulting at CRU Group in China.

Coal output fell by more than 9 percent as the government imposed mining limits to cut a glut. A price surge forced policymakers to partially backtrack, allowing production to recover at the end of the year.
While output is seen falling further in 2017, the rate should slow as the government will likely set fewer output restrictions, according to Zeng Hao, a coal analyst with Fenwei Energy Consulting Co.

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