China is bracing for the potential impact on its thermal coal market as the powerful typhoon Doksuri barrels to its coast and is predicted to make landfall on July 28, at a time when the market has already been struggling with flat industrial electricity consumption.

The National Meteorological Center has issued a red alert for the typhoon, warning of its potential severity, with coastal regions in Guangdong, Fujian, Zhejiang, Shanghai, and Jiangsu expected to experience strong winds and heavy rainfall.

Labeled as a super typhoon by the weather authority, it may also bring unexpected heavy downpours to northern areas as it may further traverse northwards.

The maritime sector is also on high alert as the National Marine Environmental Forecasting Center predicts waves of up to 7 to 10 meters in the southern Taiwan Strait, northeastern South China Sea, and the Bashi Strait, and waves of 4 to 7 meters in the northern Taiwan Strait and the sea surface east of Taiwan.

The earlier No. 4 typhoon increased precipitation to some southern regions, reducing temperatures and causing a decline in power demand for cooling. It also led to a decline in daily coal burns at coastal power plants, and even resulted in rare stockpile increases at a few power plants before the end of the summer peak consumption season.

The subsequent arrival of Typhoon Doksuri is expected to continue impacting the southeastern coastal areas, bringing more rain and potentially further reducing daily coal consumption at power plants.

Currently, sentiment for the August thermal coal market remains somewhat pessimistic. If the weather forecasts hold true, the releasement of coal demand at coastal power plants is highly likely to be further restrained, leading to a weak price outlook.

Despite possible rising temperatures in most parts of the Pearl River Delta due to the typhoon, the limited scale of coal consumption by power plants in the region is not expected to significantly affect the overall market.

However, the potential maritime disruptions caused by the typhoon may temporarily influence coastal coal shipping rates. Vessels seeking shelter in ports to avoid the rough seas could reduce the availability of shipping capacity, potentially leading to a rebound in shipping rates.

But this effect is expected to be short-lived, as the impact of the typhoon in near-sea areas usually lasts for about two days before reverting to previous conditions.

So far, it is not certain whether the typhoon will have a significant impact on the major coal-producing areas and transportation routes in China. However, localized heavy rainfall may still lead to regional road damage and other disruptions.

As major ministries in China are stepping up efforts to maintain high coal output and sufficient thermal coal supply and closely monitor coal stocks to cope with the earlier crippling heatwaves, the arrivals of typhoons may further reduce the likelihood for coal supply constraints this summer.

(Writing by Emma Yang  Editing by Harry Huo)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.

Share this article

Connect with us