Limited impact on met coal output despite poor weather, logistics issues in China's Shanxi: sources

The production at coal mines has seen a limited impact in China's coal hub, Shanxi, despite adverse weather, sources said Oct. 12. Heavy rainfall distorted railways and highway operations in the region leading to logistical and transportation disruptions for metallurgical coal.

Market participants said that the heavy rainfall and floods in Shanxi had led to the destruction of dams and railways. The Tongpu railway, which was one of the primary railway lines in Shanxi, was badly damaged but the northern bound tracks were heard to have resumed traffic while the southern bound tracks were still being repaired, industry sources said.

Several end-users said delays were expected as repair work at railways was still ongoing, while trucking activities also slowed down amid floods and landslides.

"The logistics disruption created a gap of five days' worth of coals for our plant but it is still manageable, and the gap will be filled up rather quickly," a Southern Chinese end-user said.

Another Northern Chinese end-user said that the gap left by the logistics disruptions could be filled by the end of this month and the impact was limited, citing the gradual recovery of railway lines.

While most of the end-users signaled limited impact would be expected as rail operations resumed partially, some mills that relied heavily on road transportation expressed concerns about deliveries.

An end-user in Shandong said that trucking activity was slowing down on major highways that connect Lv Liang, Linfen, and Jinzhong, the major coking coal-producing areas in Shanxi, to other parts of China, due to landslides following the heavy rainfall.

"The impact is quite significant, and it seems very limited Shanxi coking coal could be delivered to our plant at this moment, and our procurement team is trying to source coal from other parts of China," an end-user based in Southern China said.

Meanwhile, market participants said that production at coking coal mines was hardly affected by the extreme weather. A miner in Shanxi said that production of the mines was largely stable, and prices of coking coals remained rangebound, while logistics were affected, and the railway disruptions may take about a week to recover.

Shanxi is the largest coal production province in China, with 1.06 billion mt of raw coal recorded in 2020, and accounted for 27.7% of China's total raw coal production in 2020, according to the National Bureau of Statistics of China.