Coal prices have been hovering at a low level, and both supply and demand in the coal market are sluggish. The side effects of its continuous downturn have finally extended to railway transportation.
The National Development and Reform Commission recently disclosed that in June, China's railway coal shipment volume stood at 140 million tons, a year-on-year decrease of 12%. From January to June, the cumulative coal shipment reached 910 million tons, down 11.2% year-on-year. In the first half of the year, the national coal output was 1.63 billion tons, a year-on-year drop of 9.7%.
"On the one hand, the policy measures introduced successively by the state to resolve overcapacity in the coal sector have taken effect. In particular, many illegal coal mines have been shut down, which has directly affected raw coal output; on the other hand, the decline in raw coal output is related to the drop in market demand. In addition, the decline in raw coal consumption for thermal power generation and coking production is also the main reason for the drop in coal output in the first half of the year," said Xing Yan from the Raw Material Industry Research Institute of CCID Research Institute.
While output has dropped sharply, coal shipping enterprises have paid more attention to logistics costs, and comprehensive logistics costs determine customers' choice of transportation channels. After the opening of the Zhunchi Line in the second half of last year, the cost of transporting coal from western Inner Mongolia for shipment via the "Zhunchi Line - Shuohuang Line - Huanghua Port" channel is 15 to 17 yuan per ton lower than that via the "Dazhun Line - Daqin Line - Qinhuangdao Port" channel. Affected by factors such as shorter railway transportation distance and lower freight rates, a large amount of high-quality coal from western Inner Mongolia has been diverted from the Daqin Line to the Shuohuang Line for shipment, resulting in a rapid increase in the transportation volume of the Shuohuang Line and a significant drop in the transportation volume of the Daqin Line.
"The Daqin Line used to operate at overload, but now it can be said that it still has a certain amount of spare capacity," a staff member of Qinhuangdao Port told a reporter from China Times.
In market competition, the shipping role and status of the "Zhunchi Line - Shuohuang Line - Huanghua Port" have improved significantly, and coal shipping has gradually shifted from the Daqin Line, the "core major coal transportation corridor", to the Shuohuang Line, the "second major coal transportation corridor". Affected by this, the coal shipment volume of Qinhuangdao Port, Caofeidian Port and SDIC Jingtang Port decreased by a large margin of 55 million tons year-on-year. In the first half of this year, Qinhuangdao Port completed a coal throughput of 75 million tons, a year-on-year decrease of 36.7 million tons. However, the coal transportation volume of Huanghua Port and Tianjin Port has increased significantly. In the first half of the year, the coal transportation volume of Huanghua Port increased by 28 million tons.
Nevertheless, with the arrival of the summer peak electricity consumption, the peak coal consumption has come starting from June. Downstream demand has increased, and users' enthusiasm for pulling coal has increased accordingly, which has driven coastal coal transportation to gradually become busy. The coal shipment volume of northern ports may exceed that of the first half of the year.
"In the past two months, major coal shipping enterprises are bound to increase their sales and shipment volume. Railway and port transportation will improve significantly, and the coastal coal market will see the long-absent scenario of both supply and demand being booming. In September and October, which are the off-season for coal use, although civilian electricity consumption will weaken, the economy will continue to maintain a stabilizing trend, and coal demand will not drop sharply. It is expected that for the whole year, the volume of coal transported from north to south will decrease slightly year-on-year. In the second half of the year, the economy will remain stable, and the increase in civilian electricity consumption will drive the market to improve, and coal prices will continue to rise. By the end of the year, it is expected that the port transaction price of 5500 kcal thermal coal will exceed 500 yuan per ton, an increase of 130 yuan per ton compared with the beginning of the year," said an analyst from Qinhuangdao Coal Network.