Tag Archives: coal stocks

China’s Coal Piles Up

One of this Bystander’s irregular indicators of economic growth, coal stocks, suggest that the slowdown in China’s economy has yet to bottom out. State media report that the piles of coal sitting at the main coal ports of Qinhuangdo, Tangshan and Huanghua were at record levels at the end of last month, at 18.3 million tonnes between them. A month earlier, they had reached 16 million tonnes.

At Qinhuangdo, China’s main coal port, stocks have fallen from 8.9 million tonnes to 8.6 million tones. Yet as maximum capacity there is 9.2 million tonnes what coal that is needed will likely have been taken from there first. Tangshan is also bumping up against its maximum storage capacity.

Overall the country has 300 million tonnes of coal in reserve, equivalent to at least a month’s consumption. Some 75% of China’s electricity is generated by coal-powered plants and power generation accounts for two-thirds of China’s thermal coal consumption. Electricity consumption, another of our irregular economic indicators, grew by 5.8% in the first five months of the year, down from 12% in the same period a year earlier. Other big coal users, including steel and cement makers, have also seen their businesses slow. The coal industry is now expecting the slow down in demand to continue into the third quarter, despite it usually being the peak months for power consumption.

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Slow Burning Coal

Changes in electricity consumption are a rough and ready proxy for GDP growth. In the first five months of this year, China’s electricity consumption grew by 5.8%. In the same period last year, it grew by 12%. To this Bystander that feels like a better measure of the extent of the current slowdown than the official GDP numbers.

One other irregular but related measure of economic activity is how much coal is stacked up at the docks. China generates more than two-thirds of its electricity from coal. There is a lot of it right now. Coal stockpiles at China’s largest coal port, Qinhuangdao, reached 8.8 million tonnes earlier this month, up from 7.8 million tonnes at the end of last month and approaching record high of 9.2. million tonnes in November 2008 during the depths of the global financial crisis. Typically, stocks are in the 6 million-7 million tonnes range.

It is a similar story at Hebei’s other coal ports, Huanghua and Tangshan, and at Guangzhou and Fangcheng in the south. In all there are around 20 million tonnes of coal with nowhere to go. The six large power generators in eastern and southern China now have enough coal stockpiled for more than a month’s generation.

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