China’s Daqin Railway (which is used solely to transport domestic coal from western China to China’s major coal transshipment port of Qinhuangdao) will be coming under a period of routine scheduled maintenance later this month. Exact details regarding the maintenance have not been announced yet, but it is likely that this year’s maintenance will begin on around April 13th and will last for 25 days.

The Daqin Railway normally hauls roughly 1.25 million tons of coal to Qinhuangdao per day. During scheduled maintenance periods, however, coal haulage typically declines by 200,000 to 300,000 tons per day. The upcoming maintenance to the Daqin Railway will end up causing the port of Qinhuangdao to receive only about 950,000 tons to 1.05 million tons of coal per day. Over a 25-day period, this equates to 5 to 7 million tons of domestic coal that will not be railed to the port, and instead will need to be imported. The increase in imports will help the dry bulk market, particularly the panamax market.

During the annual Daqin Railway maintenance period, Qinhuangdao coal stockpiles traditionally come under pressure. Last year, for example, saw Qinhuangdao coal port stockpiles decrease to a critically low 5.2 million tons (maintenance began last year on April 3 and lasted through April 28). This led to a surge in Chinese thermal coal fixtures coming to the market during the second half of April, as more imported coal was needed to rebuild Qinhuangdao’s stockpiles. Qinhuangdao is China’s largest coal port and is the loading port for about 40% of China’s coastal coal shipments.

Going forward, a similar surge in demand for imported thermal coal cargoes is likely to come to the market beginning in late April. Many of these thermal coal cargoes will likely be carried on panamax vessels, so the panamax market is likely to be helped by this important upcoming development.

Source from CNSS