Recently released data shows that Chinese hydropower production totaled a record 91.6 billion kilowatt hours in July. This is 16.3 billion kwh (22%) more than was produced in June and 21.8 billion kwh (31%) more than was produced in July 2011. The previous record was 82.7 billion kwh produced in July 2010. The ongoing surge in hydropower production has put more pressure on demand for thermal coal in China. China's current tropical storm season has remained very active, and hydropower production stands a fair chance of setting another record this month.

Chinese demand for imported thermal coal cargoes has remained low. 5 vessels were chartered to haul imported thermal coal cargoes to buyers in China this week. In more bullish times, as many as 15 to 20 vessels are routintely charted to haul imported thermal coal cargoes to China each week.

Chinese demand for imported iron ore cargoes has been stronger. 16 vessels were chartered to haul imported iron ore cargoes to buyers in China this week. In more bullish times, as many as 30 vessels are routintely charted to haul imported iron ore cargoes to China each week. Chinese demand for imported iron ore cargoes has remained moderate because steel production has remained high and iron ore import prices have remained low. Chinese steel prices remain very low, however, which remains a cause for concern. The average price of 3.0mm hot rolled coil, for example, is now 3,690 yuan/ton. This is the lowest price since October 2009.

Elsewhere in China, July retail sales totaled approximately 1.63 trillion yuan. This is a decline of 30 billion yuan (-2%) from retail sales in June, but an increase of 190 billion yuan (13%) from retail sales in July 2011. Going forward, Chinese retail sales are likely to remain strong and will stay moderately above 2011 levels.