China's top power plants burn more coal; inventories slide

• Falling stocks, higher consumption points to tighter coal supply
  
  
• Completion of Daqin railway maintenance to boost stocks in May
  
  

Coal consumption at China's top six thermal power plants increased to 751,000 tonnes (t) per day on 27 April, according to the latest China Coal Transportation and Distribution Association (CCTD) data. This represents a 1% increase w-o-w and a 2% increase y-o-y. Current consumption is 1.8% above the seasonal average of 740,000 t/day.

Stocks at these plants fell to 12.7 million tonnes (mnt), stable w-o-w but 9.3% lower y-o-y. Inventories are 600,000 t or 4.5% below the seasonal average of 13.3 mnt.

Inventories at Bohai Sea terminals fell 2.4% w-o-w to 16.5 mnt, down 15% y-o-y. Qinhuangdao stocks fell 16.5% y-o-y to 5.7 mnt, though still 9.6% above the April average since 2009 (5.2 mnt). Caofeidian stocks fell 5.3% w-o-w and 15% y-o-y to 5.2 mnt.

Demand outpaces supply

The drawdown in inventories reflects sustained thermal generation demand amid limited near-term supply response. Consumption has remained above seasonal averages as industrial activity and power demand hold firm.

The Daqin railway maintenance schedule is expected to be completed this week. The restoration of normal railing operations could boost inventories at Qinhuangdao and other Bohai Sea terminals in early May.

Restocking rally in focus

The combination of falling stocks and above-average consumption points to tighter domestic supply. The completion of Daqin maintenance will be a key variable. A rapid replenishment cycle could ease pressure, but any delay or shortfall in railing volumes may trigger a sharp restocking rally.