China's coastal coal freight rates are showing signs of stabilizing this week, after falling for three months amid lackluster shipping demand from utilities.
As of June 18, the shipping rate for vessels of 50,000-60,000 dwt from Qinhuangdao to Guangzhou port had leveled off at Yuan 30.3/mt for three consecutive days, compared with a 2.6% drop during the previous week, according to data released by the Shanghai Shipping Exchange.
The freight for smaller vessels of 15,000-20,000 dwt from Qinhuangdao to Ningbo port in eastern China's Zhejiang province ticked down 0.4% or Yuan 0.1/mt over the past three days to Yuan 25.3/mt.
The shipping market is expected to gain some support from restocking of downstream power plants, as their inventories may further decline with increasing air conditioning demand in the coming month.
The latest data showed that inventories at the six coastal power groups dropped 3.3% week on week to 13.75 million mt on June 18, enough to cover 19.8 days, about 1.3 days less than the week prior.
Meanwhile, continued rise in coal stocks at Qinhuangdao port is likely to prompt port authorities to take measures to ease inventory pressure. Coal stockpiled at the port reached 6.98 million mt on June 19, up 13.1% from the end of May, the highest since mid-March, showed data from Qinhuangdao Port Group.
Persistent decline since late April has reduced the freight rates below the operating cost of many shipping companies, forcing them to idle or pull vessels out of the domestic market.
Fenwei Energy is a leading provider of coal market information in China.
