Coal barons struggle amid falling coal prices

Coal stockpiles at the nation's biggest utilities rose to the equivalent of 28 days of consumption as of June 10, compared with 18 days in February, according to the CCTDA report.

Meanwhile, coal imports rose as international coal prices dropped. Data from the General Administration of Customs showed that coal mine imports rose 65.9 percent to 140 million tons in the first half of 2012.

However, Wang Hongying, chief of the Academy of Macroeconomic Research of the Shanxi Development and Reform Commission, saw the price drop as a natural periodic fluctuation under the principles of a market economy.

"The policies were sort of putting the brakes on real estate and other infrastructure investment, sapping demand, whereas unceasing coal production and growing imports offered an excess supply," Wang explained.

The trend will end in the coming third or fourth quarter, as infrastructure construction programs such as those for railways and highways will kick off, and foreign exporters will raise tariffs, Wang predicted.

According to a report with Australia & New Zealand Banking Group Ltd, international coal prices will remain under pressure until seasonal demand increases in the next quarter in China, where imports are being deferred amid the mounting stockpiles.

Signs of strengthened performance, however, have not fully eased the concerns of the coal industry. Coal owners are still unnerved about bloated inventories and waning consumption on electricity due to a slowing economy.

"We are on the move to improve the quality in order to meet the greater demands of consumers," said Du Chaoan, who is in charge of coal production with Shanxi Jincheng Architecture Mining Group.

Apart from an adjustment to coal production, China's main coal producers have stepped toward structural reform and technological development.

Hebei province has kicked off a new round of coal mine reshuffle to close and integrate small-scale coal mines, and Shaanxi has integrated six State-owned enterprises into one group in a bid to weather the storm.

Wang Shouzhen, an analyst from the Shanxi Coal Industry Association, said the government should play a role in properly reining in coal production while prompting an industry upgrade that will weed out unfit companies.

"The most sustainable way to solve the problem comes from the industry upgrade, technological innovation and associated governmental regulations," Wang added. "We may not expect the golden ages, though."