Thursday, October 9

Unsold Coal Is Piling Up In China's Harbors

Worldwide slump apparently reducing demand for the fossil fuel.

An official with Qinhuangdao harbor in China said Friday that the northern China harbor (the largest in the country) has a coal pileup that is increasing by 100,000 tons a day, according to China Daily.

By mid-September, Qinhuangdao's coal stockpile stood at more than 8 million tons: 3 million tons more than regular levels. In the past two weeks, the surplus has started to build daily.

Coal storage levels at Qinhuangdao, the largest in the country, act as a barometer of the coal market across China, rising with reduced demand, shrinking when demand is greater than supply.

The anonymous official warned that the maximum pileup the harbor could accommodate was 10 million tons.

The surplus is caused by a drop in demand for exports and for local use. According to the China Electricity Council, major consumption regions where coal is used in electric-power generation are also reporting increasing surpluses.

One such harbor, the Guangzhou harbor in southern China had more than 2 million excess tons of coal, as of September 17. Coal trading has dropped 25 percent, according to the Guangzhou Port Group. Trading volume has decreased since July, with a monthly turnover of only 3 million tons. The group was turning over 4 million tons as recently as May and June.

Coal is also piling up at major coal power stations.

The China Electricity Council reports that its coal pileup was about 19 million tons in July, enough to meet a 10-day demand. But by the beginning of September, the excess increased to more than 29 million tons.

Restricted production during the Olympics and a cooler, rainy summer reduced Chinese demand for power said Wang Ling, a coal analyst with the United Metal Web. In addition, abundant rainfall meant more was electricity generated by hydro-power plants.

But the mounting coal pileup was primarily seen as caused by lower demand, with most of the drop-off caused by global economic conditions, according to industry observers.