Coal stockpiles at Qinhuangdao port, Hebei province, China's largest coal port and a domestic benchmark, dropped by 30.9 percent to 5.3 million tons in March compared to the previous month, according to statistics by China National Coal Association (CNCA).

Coal being delivered for shipment at Qinhuangdao Port. [China Daily]

The country's coal inventory nationwide reached 176.2 million tons in late March, which decreased by 4.5 million tons, a 2.49 percent decline compared to the inventory in late February, the CNCA said.

Sources with Qinhuangdao port,said with the booming market demand for coal, the volume of coal transportation at the port has been increasing since early March.

Huang Shengchu, president of the China Coal Information Institute, said that the coal inventory decrease at Qinhuangdao port has largely been due to the demand triggered by the country's 4 trillion yuan economic stimulus package.

"The stimulus plans are targeted largely at infrastructure construction, and the related sectors, like cement and steel, are among the country's top coal consumers," Huang said.

Admitting that the decreasing inventories are a sign of improvement, Huang said it would still be difficult to predict if the overall economy has started recovering.

Industry insiders said due to the stimulus plans many small- and medium-sized enterprises have resumed production while electricity and coal demand in Jiangsu, Zhejiang, Guangdong, Shanghai and some other coastal regions have rebounded due to recovering economy in southern China.

According to the National Electric Power Dispatching and Communication Center under the State Grid Corp, the country's power generation touched 286.7 billion kWh in March, down 0.71 percent year on year, compared to the power generation in January estimated at 247.6 billion kWh, a 12.3 percent year on year decline.

The lower declining rate of power generation in March would be another indicator of improvement in the Chinese economy and could contribute to the country's dropping coal inventories, industry insiders said.

Analysts said the disagreement between Chinese utility firms and miners over this year's contract price for coal is another reason for the dropping stockpiles at Qinhuangdao port.

The CNCA also reported that the country's raw coal output in the first quarter of the year reached 554.3 million tons, up 5.22 percent year on year.

Raw coal output increased 6.41 percent in March to 201.4 million tons, an 8.75 percent year on year increase, the CNCA said.

China's coal sales reached 532.1 million tons in the first quarter of the year, an increase of 2.9 percent year on year, while coal sales rose 5.4 percent in March, touching190 million tons with a 6.8 percent year-on-year rise.

Huang said despite the conflicts between China's power generators and coal miners over the contract coal price, the country's coal supply has remained stable and imported coal will not pose a threat to local coal, as no single coal producer has a production capacity large enough to satisfy the nation's huge coal demand.

(China Daily April 14, 2009)