Chinese coal stockpiles are at their lowest levels in a year as high international prices limited import volumes and maintenance to the country's internal coal railway caused disruptions.
Combined stocks at Chinese ports have fallen to 14.5m tonnes, representing a drop of almost 25% since early March when they reached 19.8 m tonnes, the highest level since December when volumes reached an all-time high of 20.5m tonnes, according to ICAP Shipping.
Despite relatively high international prices, the shortage has pushed up domestic coal prices, and could therefore create a boost in cargo demand for panamax and supramax bulk carriers to carry thermal and coking coal from countries such as Australia and Indonesia.
Maintenance to the Daqin railway line, which carried 405m tonnes of coal from Datong-based mines in the Shanxi province to the port of Qinhuangdao port last year, continues to hamper domestic supplies.
Coal at Qinhuangdao is now being sold for $137 per tonnes (6,000 kcals basis), which is making Australian coal prices of $115.79 per tonne fob at Newcastle plus freight of around $7.50 per tonne "comparatively attractive", ICAP said.
According to the report this discount of more than $10 per tonne ought to create a stronger incentive to import coal this [northern hemisphere] summer.