Qinhuangdao Coal Port Seen as Economic Barometer, Set for Record Supply

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August 19, 2014

Aug. 20 (Bloomberg) — Qinhuangdao, home to China’s largest coal port that’s been called an indicator of Asia’s biggest economy, is set for record commodity deliveries over the next three years as urbanization boosts demand for the fuel.

Shipments of mainly coal and ores via the port, also a popular resort where the late Chairman Mao Zedong holidayed, may rise by 20 million to 30 million metric tons by 2017, Xing Luzhen, the chairman of Qinhuangdao Port Co., said on Aug. 14. Supplies hit a record high of 279 million tons in 2011.

Power demand in China, the world’s largest energy consumer, is accelerating as a growing rural population uses more household appliances and as urban residents buy more electric cars, according to Xing. The country depends on coal for 66 percent of its energy, data from the National Energy Administration show.

“Qinhuangdao port’s coal business will keep rising together with China’s coal consumption, a trend that may last for at least the next 20 years,” Xing said in the northern city, where the Great Wall meets the Bohai Bay.

The port, the delivery point for about 40 percent of China’s seaborne coal, is a barometer of the nation’s economy, former Premier Wen Jiabao said in 2008. Gross domestic product rose 7.5 percent in the April-June period from a year earlier, the first acceleration in three quarters.

Qinhuangdao Port, listed in Hong Kong, also operates two other facilities in northern China’s Bohai Rim and had a record total throughput of 365 million tons in 2013. Its new terminal in Caofeidian, with an annual capacity of 50 million tons, may begin trial operations as early as this year, Xing said.

Coal Contracts

The company currently offers integrated services in container cargo, crude and oil products as well as liquid chemicals. It began as an independent dry-bulk facility that relied on coal for 90 percent of its business until 2002. The fuel’s share of total volumes handled declined to about 70 percent last year, mainly displaced by container cargoes and metal ores, according to Xing.

Qinhuangdao Port will benefit from having stable contracts of as long as 10 years that cover about 70 percent of throughput, according to Xing. Its long-term customers include Shenhua Group, China National Coal Group, China Datang Corp. and China Guodian Corp., he said.

The company, which made one of the six largest Hong Kong initial public offerings last year, will report first-half earnings on Aug. 22.

“Every year we’re looking at buying overseas ore and coal ports,” Xing said, adding that Qinhuangdao Port has studied facilities in European countries and Canada.

Copyright 2014 Bloomberg.

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