Chinese coal industry to experience high stockpile pressure

News was prepared under the information support of Online Daily Newspaper on Hellenic and international Shipping "Hellenic Shipping News".

30 Mar 2009

It is reported that in the last two weeks, coal stock at Qinhuangdao port has dropped almost by 1 million tonnes but does this mean the coal industry has warmed up? Not really the sectors of iron and steel, and cement still remain weak, and it remains to be seen how long the power can sector keep growing. On March 24th the amount of coal piled up at Qinhuangdao port came down to 5.79 million tonnes dropping nearly 1 million tonnes, or 14% compared with the 6.72 million tonnes two weeks ago. Guangzhou port tells the same thing, and its coal stock went down from 2.1 million tonnes on March 11th to 1.94 million tonnes on March 23rd declining by 8%.
The uptrend is caused by the resuming power capacities, as in China's Huaneng Group, power capacities have all been utilized. Authoritative sources predict that all power enterprises will make profit in the Q1 of the year, and will bring forth stronger demand for coal. In fact the uptrend was caused exactly by the growth of power production. Statistics show that the average power production in the beginning of Mar remained at 9.37 billion kilowatt-hours, making the growth rate increase by some 1.4%YoY the second straight month that witnessed growth.
Despite the seemingly pleasing trend, industry insiders believe that the coal industry will experience once again the pressure of high coal stock.
An analyst said "If you look at the power production statistics around March 17th you can see that power production has dropped again. The downturn is caused by deficient demand of the iron and steel and cement sectors."Another analyst called Mr Ma Keming pointed out in his report that steel mills will go through production cut again, and the cement industry is quite similar to the steel industry.

Source: MySteel