Coal inventory in various Chinese ports hit record highs24 June, 2012, 19:42. Posted by Zarathustra
A little more than a weak ago, we noted that coal inventories in power plants in the Guangdong grid has risen to unprecedented level, and that coal inventories in various ports have been rising. Also, as steel demand and production fell, one company which produces coking coal mainly for steel production is trying to diversify its business into pig slaughtering.
Qinhuangdao, one of the biggest ports in China where coal cargoes are being handled, now has a record high inventory of coal (via Sina). Inventory level has reached at 9.4 million tonnes, approaching to the maximum warehousing capacity, and warehouses are so full of coal that incoming trains could not unload the coal, and are forced to stay idle with coal on board, leading to congestion in the railroads.
Because the demand for coal fell as electricity production dropped, and as coal inventories at power plants level are also at record high levels according to the report, there are only very few buyers for the record stockpile of coal. As a result, despite aggressive price cutting, the inventory level stays high in the port.
The following chart shows the thermal coal inventory in Qinhuangdao port, reaching record high level:
While the following chart shows the thermal coal inventory in Tianjin port reaching record high level:
These data points for coal inventory add to the evidence from indirect gauges of the economy that weakness in the Chinese economy is to persist, and there is little doubt that the current economic slowdown is much more severe than conventional data points are leading us to believe.