Daqin railway maintenance exerts limited impact on China coal market

sxcoal.com Viewpoint,  Inland Shipment 2020-05-29 11:51:24

Month-long maintenance to China's coal-dedicated Daqin railway, which ended on May 28, two days ahead of schedule, has exerted limited impact on China's coastal thermal coal market, due to still weak demand from well-stocked power plants.

Yet the maintenance to Daqin, which accounts for nearly 20% of China's rail coal transport, coupled with mine halts or output cuts for the "Two Sessions" (May 22-28), still affected rail coal inflows into northern ports (mainly Qinhuangdao and Jingtang ports) in May.

While, steady recovery of industrial activity at southern China boosted coal burns at utilities, resulting in a mismatch between supply and demand and a structural shortage (lack of premium low-sulfur supplies) in coal available at northern ports.

Data from sxcoal.com showed coal arrivals to Qinhuangdao port averaged 0.4 million tonnes each day over May 1-28, 22% higher than the daily average in April, while outbound shipment climbed 30% from April to 0.47 million tonnes.  

Accordingly, coal stocks at the port fell to 3.89 million tonnes on May 28, a reduction of 1.9 million tonnes from the level on April 30. Coal stocks at SDIC Jingtang port also dropped to 1.38 million tonnes from 2.41 million tonnes at the end of April.

Yet, it was mainly the bullishness of sentiment that caused a rapid rebound of spot thermal coal prices from the multi-year low in mid-May, before stabilizing this week. Fenwei CCI 5500 index, gauging 5,500 Kcal/kg NAR thermal coal traded at northern ports, has been stable at 548 yuan/t FOB with VAT since May 25, after rising 79 yuan/t from recent low of 469 yuan/t on May 11.

Increase in CCI 5000 index, which assesses domestic 5,000 Kcal/kg NAR coal at northern ports, has also slowed since May 25, following a 85 yuan/t jump from recent low 403 yuan/t on May 9, standing at 489 yuan/t FOB on May 28.

There's high likelihood for spot coal prices to weaken in the near future, as port stocks gradually recover to normal levels along with the resumption of output at coal mines after the "Two Sessions" and increased rail shipment by Daqin line.

Affected by COVID-19 epidemic that paralyzed industrial activity in China, thermal coal demand from end users, mainly power plants, had been weak since the Spring Festival in late January, driving down prices at Bohai-rim ports to the lowest level since August 2016 when China's supply-side reform was lifting prices of the fuel from another record low seen in mid-November 2015.

Sluggish demand forced some producers to pare down on production and shipment to northern ports. Coal shipment by Daqin line averaged 980,000 tonnes or so each day in April, even lower than a daily average of 1.09 million tonnes during the routine spring maintenance last year, according to data from sxcoal.com.

Over January-April, a total 117.05 million tonnes of coal was delivered by Daqin railway, a slump of 17.8% year on year.

Normally, averagely 1.25 million tonnes of coal from Shanxi, Shaanxi and West Inner Mongolia is transported via Daqin rail line each day, of which around 1-1.1 million tonnes goes to Bohai-rim ports.

(Writing by Jessie Jia  Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 Supply woes spur buying interest of thermal coal at N China ports 2020-07-02

Buying appetite of spot thermal coal was seen notably higher at northern China ports, spurred mainly by supply shortage at main production provinces and CHN Energy's upward July term contract prices.

2 China Jan-May coal railway shipments down 8% on yr 2020-07-02

Coal shipments by railway totaled 920 million tonnes across China in the first five months, down 8% from a year ago, data from the National Development and Reform Commission (NDRC) showed on June 30.

3 China Coal Daily Track (Jul 2) 2020-07-02

Thermal coal Production area Coal mines reported insufficient supply lately, and some mines saw limited cargoes for local buyers after shipping cargoes through railway to users in other areas. C

4 CHN Energy Jul term contract prices reach new high so far this yr 2020-07-02

China's top coal mining group China Energy Investment Corporation, or CHN Energy, raised its monthly term contract prices of thermal coal for July delivery to a new high so far this year, market sourc

5 Chinese steel market bracing for slack demand season 2020-07-02

Chinese steel market is bracing for typically slack demand season, alongside rising steel stockpiles and slightly contracted demand, said Ge Xin, vice director of Lange Steel Research Center.

6 Xinjiang Jan-May raw coal output rises 15.9% on yr 2020-07-02

Xinjiang Uygur autonomous region saw a 15.9% year-on-year rise in raw coal output in the first five months this year, showed local official data. The region churned out 105.32 million ton

7 Indonesian thermal coal prices flat; shipping rates up 2020-07-01

Indonesian thermal coal prices kept range bound since late last week in the Chinese seaborne import market, although downward pressure was still looming large. Trades were heard few and f

8 Chinese coking coal miners expected prices to rise on solid sales 2020-07-01

Chinese miners expected coking coal prices to rise moderately in the coming days, gaining support from solid purchase from coke plants and ongoing tight control of import quotas. Coke pro

9 Chinese thermal coal gains steam after being stable for two weeks 2020-07-01

Chinese domestic thermal coal prices are beginning to move up after being stable in the second half of June, boosted by news that Shenhua, or CHN Energy, adjusted up purchasing prices for thermal coal

10 China Coal Daily Track (Jul 1) 2020-07-01

Thermal coal Production area At least 11 coal mines raised their prices in Shaanxi's Yulin at the end of June, when coal production was limited by tight sale quotas. From June 27, there were

Most Read Articles

1 Tough times ahead for Indonesian coal producers as China and India demand drops 2020-06-28

Weaker coal demand in China and India in the wake of the COVID-19 epidemic and compounded by policies favoring domestic coal industries will cause severe shortfalls in output for 10 major listed Indon

2 China May thermal coal imports slump 38.4% MoM 2020-06-28

China's thermal coal imports tumbled in May amid tightened import restrictions after notching a peak a month ago, customs data showed. The country imported 8.95 million tonnes of thermal

3 Chinese demand muted for Indonesian thermal coal amid festival 2020-06-28

Chinese buying demand for Indonesian thermal coal stayed muted during the three-day Dragon Boat Festival holiday, with a lack of clarity on market direction in the days ahead. The festiva

4 Thailand May thermal coal imports log 2nd monthly drop 2020-06-28

Thailand imports of thermal coal (including bituminous coal and sub-bituminous coal) in May logged the second monthly drop in a row, according to the latest data from the Thailand Customs.

5 China May coking coal imports down 19.1% on yr 2020-06-29

China's coking coal imports totaled 4.79 million tonnes in May, down 19.1% year on year and 23.8% month on month, data from the General Administration of Customs showed. Value of the impo

6 China coal mining & washing industry profit slumps 31.2% in Jan-May 2020-06-28

Total profit in China's coal mining and washing industry posted a decline of 31.2% compared with a year ago to 78.28 billion yuan ($11.1 billion) in the first five months this year, showed data from t

7 China May coal imports fall for 1st time this yr 2020-06-29

China's coalimports (lignite included) logged the first decline this year in May, falling 19.7% year on year, showed customs data, mainly dragged by tightened import quotas. Coal im

8 Cost rises fueling bullish sentiment to Chinese thermal coal market 2020-06-28

Chinese domestic thermal coal market sentiment was supported by increased costs after the Three-day Dragon Boat Festival holiday. The market has flatlined for almost two weeks with variou

9 Indonesia mulls over coal production cut to prop up export price 2020-06-29

Indonesian Coal Mining Association (APBI) asked its member coal mines to cut output by 40-50 million tonnes in June-December in order to fight against price falling. The APBI advised its

10 Indonesian thermal coal likely to further head south amid faltering demand 2020-06-30

Indonesian seaborne thermal coal market witnessed another silent session on June 30, with few deals concluded and offers/bids largely unchanged. The most-traded 3,800 Kcal/kg NAR thermal

Scan to download sxcoal.com mobile APP