Coal stockpiles at major northern transfer ports in China increased to over 30 million tonnes, reaching the highest level since early June and signaling a mismatch between supply-side momentum and sluggish downstream demand.

As of December 23, total coal stockpiles across Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports stood at 30.18 million tonnes, up 12.6% from the end of November and 11.0% higher than the same period last year, showed the latest Sxcoal data.

Since early November, falling temperatures prompted authorities to re-emphasize energy security and mandate power plants to increase coal stockpiles to cover usage for 15 days or more. In response, coal mines ramped up production, and deliveries under long-term contracts picked up, ensuring supplies to major transshipment ports.

With the conclusion of autumn maintenance on key coal transport lines and the continuation of preferential freight rates by select regional railway groups, rail coal transport volumes increased. The easing of losses in shipping coal from production areas to ports also pushed up producers' delivery enthusiasm.

Daqin railway, a key artery for coal transport, saw daily shipments rebound swiftly to over 1.2 million tonnes after maintenance concluded in late October. In November, the rail line delivered 37.22 million tonnes of coal, its highest monthly total in two years and registering gains compared to year-ago and month-ago levels.

Similarly, Tangbao line, another coal-dedicated railway, saw November freight volumes rise 22.7% year on year to 11.49 million tonnes, according to the official Wechat account of China State Railway Group.

In comparison, outbound shipments from the ports decreased due to weakening demand among power plants. From late October through early November, utility coal inventories accumulated following phased restocking. But coal burns for power generation failed to pick up substantially as cold air masses remained weaker than expected.

Moreover, portside thermal coal prices hit their peak of the year in November, triggering caution among buyers. Even those facing immediate restocking needs appeared hesitant, shunning costlier cargoes and inclined to delay purchases. This curbed coal offtakes from northern ports.

On November 12, the number of vessels anchoring at northern ports for coal shipments peaked at 153, the highest this year, but then fell sharply, Sxcoal's data showed.

The figure dropped to 63 by December 23, and the month-to-date daily average was 66, down 45 from November's average. While the December average was 13 vessels more than the same period last year, it remained far below 135 in 2023, 128 in 2022, and 204 in 2021.

The elevated stockpiles created bottlenecks at port storage yards, limiting traders from bringing in new cargoes. One large coal company reportedly postponed the loading of imported coal due to space constraints, opting instead to prioritize domestic shipments.

Looking ahead, weather forecasts offer little support for a surge in coal consumption. Temperatures from December 24 to January 2 are expected to remain 1-2 degrees Celsius above seasonal norms across most of the country. Only parts of Xinjiang, Inner Mongolia, and northeastern provinces may see slightly below-average temperatures.

Given the mild winter outlook, ample mine supply, elevated power plant stocks, and high long-term contract fulfillment, a significant inventory drawdown at northern ports appears unlikely in the short term. Yet, the decline in rail shipments could restrain the pace of further stock build-ups.