Poplar wood chips were treated hydrothermally and the increase of process efficiency by water recirculation was examined. About 15% of the carbon in the biomass was dissolved in the liquid phase when biomass was treated in de-ionized water at 220 degrees C for 4 h. The dissolved organic matter contained oxygen and was partly aerobically biodegradable. About 30-50% of the total organic carbon originated from organic acids. A polar and aromatic fraction was extracted and a major portion of the organic load was of higher molecular weight. By process water recirculation organic acids in the liquid phase concentrated and catalyzed dehydration reactions. As a consequence, functional groups in hydrothermally synthesized coal declined and dewaterability was enhanced. Recirculated reactive substances polymerized and formed additional solid substance. As a result, carbon and energetic yields of the produced coal rose to 84% and 82%, respectively. (C) 2013 Elsevier Ltd. All rights reserved.