Shandong bans coal delivery to ports via trucks
To facilitate the transfer, coal buyers or suppliers are strongly discouraged from renewing their truck transportation contracts to move coal to the above-mentioned ports, and at the same time, the port authorities are also requested to suspend loading coal onto trucks, with the provincial authorities to conduct random and spot checks at the ports to guarantee the adherence, the notice states.
No penalties on the violation of the new practice, however, have been spelled out, which is interpreted by the market that the notice is yet legally-binding.
Qingdao, Yantai and Rizhao are three core local ports in handling commodities including iron ore, coal and coke, and a source close to Yantai port authority confirmed that the port has stopped receiving coal trucks, while officials from Rizhao and Qingdao disclosed that no detailed guidelines have been issued. All, believe, though, it will just be a matter of time for coal deliveries to be moved away from trucks.
Diesel-fuelled trucks are identified one of the polluting sources in China, Mysteel understands.
To fight against air pollution, Shandong government has been actively working on lowering commodities transportation via trucks since 2018, with coal named the first commodity to accomplish the replacement among all the industrial goods also including iron ore and coke.
Mysteel’s survey on these three ports in Shandong in question also showed that they have already transported the majority of coal via rail and water as of 2018, with the tonnage totalling about 25 million tonnes as against 7.5 million tonnes handled by trucks.
Coal market sources in Shandong, however, challenged the feasibility of the complete truck ban to the three ports.
“Railway has already been our core means of coal transportation to ports with Rizhao being our main destination,” an official from a key coal miner in Shandong said, adding, though, that trucks are still engaged for short-distance deliveries, “and I do not think the transfer will be completed very soon based on the existing railway capacities.”
A Shanghai-based analyst in East China shared a similar doubt.
“The replacement of trucks with water or rail services to move coal to ports in Shandong is nothing new, as it has been mentioned many times last year as part of the province’s air pollution control efforts,” he said.
“The market, though, is still awaiting feasible measures from the government on how to achieve so fully and completely, as the current railway and water transportation capacities seem insufficient to take over all the coal delivery,” he added.
Besides possible logistics cost rises, the Shandong province has not issued any financing plan so far to effectively expand the cargo railway service within the province either, which has left the market sources unclear who should be funding the construction, Mysteel understands from the market sources.
Written by Sean Xie, xiepy@mysteel.com
Edited by Hongmei Li, li.hongmei@mysteel.com
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