China’s coal rail transport capacity may exceed demand in the future, as more coal-dedicated rail lines are expected to kick off construction and put into operation, while coal demand growth is set to decelerate amid a slower economy and the government’s clean air drive.&nbsp;<br /> <br /> The Jin-Yu-Lu rail line, the third coal-dedicated railway connecting major mining areas in central-south Shanxi to Rizhao port in eastern China, is expected to finish construction by the end of this year, adding 200 million tonnes of transport capacity.<br /> <br /> Once going operational, the combined transport capacity of the new line together with Daqin and Shuohuang rail lines would exceed 800 million tonnes, higher than the total outbound shipment to northern China ports, which was only 617 million tonnes in 2013.<br /> <br /> As of June 19, the rail line had finished tunnels of the Taihang Mountains, a mountain range running down the eastern edge of the Loess Plateau in Shanxi, Henan and Hebei provinces.<br /> <br /> In April, China increased its investment budget in railway sector to 800 billion yuan, 25% more than the original plan, in a bid to stimulate economic growth. As part of the investment plan, two more coal-dedicated rail lines linking western Inner Mongolia with Tangshan, Hebei province and Ji’an Jiangxi, each with 200 million tonnes of annual capacity, is expected to kick off construction in the near future.<br /> <br /> However, China’s coal sector is suffering from sluggish demand amid the slowdown in economy. This, coupled with stronger hydropower output, has led to a continuous decline in coal prices since the onset of the year.<br /> <br /> Thermal coal prices have almost halved from the peak in 2012, falling to 494.5 yuan/t for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port on a FOB basis, inclusive of VAT, according to the Fenwei/Platts CCI 1 Index published on July 9.<br /> <br /> <p> The State Council is actively promoting clean energy to replace coal in Beijing-Tianjin-Hebei metropolitan area, Yangtze delta region, Pearl River delta regions and Shandong province, targeting 83 million tonnes reduction of coal consumption by 2017. </p> <p style="text-align:center;"> <img src="/upfiles/news/image/20140710/20140710171631_1961.jpg" alt="" /> </p>