In its weekly commodity report, ANZ said China’s Shanxi provincial government had almost halved 2822 legal coal mines to 1500 through resources consolidation, mergers and acquisitions.

The Shanxi Coal Industry Bureau will reduce coal production by 80-90 million tonnes per annum through the shutdown of some 800 small local coal mines in the province by year-end.

The bank also noted China had its first-ever non-holiday month decline in power output for a decade, with the 4% drop in October indicating there has been less electricity consumption from the country’s heavy industry.

Coal fuels about 80% of the nation’s electricity and ANZ said industry officials were forecasting that power consumption would keep falling this year.

For coking coal concerns, Macquarie Research has performed its own calculations and assessments of falling global steel production, which factor in large steelmaking falls from China.

Figures from the World Steel Association (WSA) revealed a 12.4% year-over-year drop in October.

June peaked with a rate of 1.45 billion tonnes per annum for the month but this has fallen 265 million tonnes to a rate of 1.19Btpa for last month.

Macquarie noted China accounted for 148Mtpa of this fall, some 55.84%, while the former Soviet Union dropped 47Mtpa, western Europe declined 29Mtpa and US steel production fell 19Mtpa.

However, the investment bank said the severe production cuts from steelmakers in Europe for this month and December were not evident in the WSA numbers, and suggested a decline of over 15% year-over-year, which would be the largest dive since the mid-1970s.

“If we subtract Chinese apparent demand from the world total, we can calculate a non-Chinese apparent demand,” Macquarie added in its written analysis.

“What these numbers suggest is the Chinese apparent demand fell 19 per cent year-over-year in October, while rest of world demand fell 8.3 per cent year-over-year.

“Virtually every other downturn this decade has been desynchronised between China and the rest of the world (when non-Chinese demand weakened, Chinese demand strengthened and vice versa).

“This kept global growth strong and mostly positive. Steel is seen as a proxy for global growth and this data suggests a major global recession.”

In another commodity update this morning, Macquarie said the Shanxi Coking Industry Association had told its members to increase production cuts and to extend them until June 2009, which was reported by Shanghai Securities News.

Macquarie added that coking plants in Shanxi Province have been told to cut 60-70% of production, a jump from the previous 40-50%.

“Chinese domestic coke prices have plummeted from close to $400 a tonne in late August to $175 per tonne at the end of last week,” said Macquarie.