Extension of Daqin Railway Maintenance


Chinese railway officials have announced that maintenance to China’s coal-dedicated Daqin Railway (which began on October 8th) will be extended five days. The Daqin Railway normally hauls about 1.25 million tons of coal to Qinhuangdao each day. During periods of maintenance, however, the railway is offline for part of each day during which time coal haulage normally declines by 200,000 to 300,000 tons per day.

Daqin Railway domestic coal haulage (carrying domestic coal from western China to the port of Qinhuangdao) is now expected to decline by a total of 4 to 6 million tons (it was previously announced that this month’s maintenance would last for 15 days, rather than 20 days, which would have instead resulted in 3 to 4.5 million tons of coal not being railed). It now is believed that 4 to 6 million tons of coal will likely need to be imported to compensate for the decline in Daqin Railway domestic coal haulage.

The most recent period of maintenance to the Daqin Railway, which began in April of this year, caused Qinhuangdao coal stockpiles to fall to a critically low 5 million tons and led to a very large amount of Chinese thermal coal fixtures coming to the market during the second half of May, as more imported coal was needed to rebuild Qinhuangdao’s stockpiles. Going forward, a surge in Chinese thermal coal fixtures is likely to occur by late October. As it now stands, Qinhuangdao stockpiles are already low at only 6 million tons. Qinhuangdao coal port stockpiles have remained below the critical 7 million ton level since August.

Chinese power plant coal stockpiles also remain at low levels. The most recently released data shows that as of the start of October, stockpiles of coal at major Chinese power plants have risen to approximately 73.3 million tons. This is 9.8 million tons (15%) more than was stockpiled at the start of September. Despite the ongoing rebound, however, stockpiles are still down year-on-year by 17 million tons (-19%). Overall, period of coal restocking remains underway in China as peak winter electricity demand season is fast approaching. More coal is set to imported which will most help the panamax market (panamax vessels carry to most amount of coal to Chinese buyers. Capesize and supramax vessels are also used, however, and the expected rise in Chinese coal imports will offer a small amount of support to these markets as well.

Source from : CNSS