<article><p class="lead">Coal stockpiles at China's main Qinhuangdao coal transshipment port edged up from last week but remained well below main economic planning agency the NDRC's target of at least 5mn t for the summer restocking season.<i></i></p><p>Environmental inspections focusing on the coal-consuming cement industry during the peak production season, which typically starts this month, are curtailing consumption, cushioning the impact of any supply shortfall. At least 1,000 cement producers across eight Chinese provinces have been subject to environmental inspections since earlier this week, restricting output. China's construction sector consumed 490mn t of coal in 2020, according to data from coal industry association the CCTD, with most of this volume taken by cement manufacturers. </p><p>Coal inventories at Qinhuangdao port were at 4.51mn t yesterday, up from 4.42mn t a week earlier, according to CCTD. Inbound deliveries in the week to yesterday were at 3.3mn t, up from 3.1mn t a week earlier. Offtake levels in the week to yesterday were at 3.2mn t, down from 3.79mn t a week earlier. </p><p>The significant decline in offtake levels was partially because of adverse weather in the Bohai rim in north China over the past two days, which might have prevented some vessels from loading coal. The vessel queue at Qinhuangdao port averaged 36.7/d in the week to yesterday compared with 49.4/d a week earlier, according to <i>Argus</i>' calculation based on CCTD data.</p><p>A rise in coastal freight rates may have also curbed demand from coastal utilities. Coastal freight rates for 50,000-60,000t vessels delivering coal from Qinhuangdao to the southern port of Guangzhou were at 65.60 yuan/t ($10/t) yesterday, according to CCTD data. This was the highest level since 18 January when severe coal shortages in China drove up coastal freight rates. </p><p>Some Chinese coal consumers may hold back from spot purchases in the coming week to see if prices will fall and by how much, after a sharp decline in China's coal futures market yesterday. The actively traded May contract on the Zhengzhou commodity exchange closed at Yn689.80/t yesterday after weeks of sustained increases, down from Yn734.80/t the previous day. The fall was largely attributed to a recent NDRC meeting to discuss concrete measures to address any potential summer coal shortages. Some market participants expect domestic output to be ramped up under government pressure, which may weigh on spot prices. </p><p>Inbound deliveries to Qinhuangdao port are being curtailed by maintenance work on the critical coal-transporting Daqin railway, which delivers most of the coal that Qinhuangdao receives. The maintenance is expected to end by early May. </p><p>It is unclear if Chinese coal producers will heed the NDRC's latest call to raise output, given enhanced safety inspections in the coal sector and corruption investigations in the key producing regions of Inner Mongolia and Shaanxi. The inspections, which are being conducted independently by separate agencies, may complicate the drive to raise output.</p><p>At China's other key coal transshipment port of Caofeidian, stockpiles were at 5.45mn t yesterday, down from 5.65mn t a week earlier. Inbound deliveries to the port in the week to yesterday were at 1.59mn t, down from 1.69mn t in the previous week. Offtake levels in the week to yesterday were at 1.78mn t, up sharply from 1.28mn t in the previous week. The vessel queue at the port averaged 12/d for the week to yesterday, up from 8.14/d a week earlier.</p><p class="bylines"><i>By Kelvin Leong</i></p></article>
