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The already embattled coal industry could be in for more bad news due to policy changes by the world's top coal producer.

Chinese state-owned media, according to The Wall Street Journal, reported this week that some of the country's smaller ports are refusing coal shipments from overseas as the government seeks to limit coal imports.

China is easily the world's largest producer and consumer of coal, but the country cut production last year in an effort to curb a long-running supply glut. Officials, however, are now targeting imports in hopes that domestic coal companies see the benefits of any subsequent price increases.

The Journal noted that domestic prices increased 2 percent to 4 percent over the past two weeks as Asian coal futures slid by 4 percent.

(AP Photo)

The import restrictions particularly target lower-quality, dirtier coal and could hit Indonesian producers the hardest.

But the paper warned that even companies with higher-quality coal continue to face daunting obstacles. As coal continues to lose favor with countries seeking to combat climate change, regulatory decisions by China could wreak havoc on the market with little warning due to its disproportionately large role in the industry.

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