China cuts coal output targets

China has lowered its coal output targets for the country's top three producing regions, to ease an oversupply built up by the economic slowdown, which has weakened prices.

The National Development and Reform Commission has set China's total coal output for 2012 at 3.65 billion tons, an increase of 3.7 percent from a year earlier, but an 8.7 percent drop in last year's growth rate at the same stage, according to a statement.

Targets for Inner Mongolia autonomous region, China's top coal producing area, were lowered to 920 million tons from an earlier estimate of more than one billion tons.

Shanxi's target was downgraded to 810 million tons from a previous forecast of around 900 million tons.

While Shaanxi's production target has been cut to 400 million tons, against an earlier forecast of 460 million tons.

Steam coal prices in China have dropped by about 20 percent since April to hover around 626 yuan ($98.45) a ton last week.

Coal accounts for nearly 80 percent of the fuel used to generate electricity in China.

Economic growth in the world's second largest economy registered 7.6 percent in the second quarter, the slowest pace in three years. The ongoing economic slowdown has reduced demand for power, with total generation growing at around 2 percent so far this year, compared to 12 percent in 2011.