Since early July, China’s Yangtze River region has been facing flooding which disrupts domestic coal shipping to nearby regions, along with weakening power demand and dragging down the domestic coal prices.
Coal vessels to Hubei province and ports beyond are having problems due to the flooding. Vessels sailing to the Jiangxi and Anhui provinces in the east of Hubei can only proceed with a reduced load below normal capacity, which is deemed uneconomical, making shippers reluctant.
At least, shipping to Jiangsu in east China has not been really impacted by the flooding.
In the affected provinces, power consumption for air-conditioning was down due to lower temperatures and rainy weather this summer. Other than that, industrial power demand in the regions has also been harmed by the flood-related disruptions.
Data compiled by coal industry association the CCTD showed that the offtake from the main coal-handling port of Qinhuangdao in north China went down from 549,000 tpd a week earlier to 475,000 tpd on the week to Tuesday.
Domestic coal prices also keep falling this week with bids for NAR 5,500 kcal/kg coal at CNY570-578 (USD81.40-82.60/t) fob ports in North China. The offers were around CNY580/t (USD83/t) fob. Both bids and offers showed a decline from the latest assessment of NAR 5,500 kcal/kg prices at CNY586.42/t (USD 83.9/t) fob Qinhuangdao on 17 July.
Looking ahead, the Yangtze river flooding is estimated to ease gradually as the rainy season has ended in many of the affected regions. Coal demand is expected to rise soon following higher temperatures.
