Shortage in China Rail Capacity to Persist to 2012 Affecting Coal Transport

Bottlenecks in China's ability to transport coal by rail are expected to persist until 2012, with new rail capacity still under construction and only slowly coming on line, a researcher at a think-tank affiliated to the country's top economic planner said on Thursday.

China is investing billions of dollars in expanding its railroad capacity, including upgrading track and modernizing signals and braking systems to allow trains to carry heavier loads.

An unusually harsh winter in the south brought nearly half the country to a standstill earlier this year, showing the country's transport and power networks are still vulnerable to large-scale outages.

"Rail transportation will still be very tight by 2012," Dong Yan, researcher at the Institute of Comprehensive Transportation of the National Development and Reform Commission (NDRC), told an industry conference.

"Very little capacity on the new routes will be brought into operation."

Capacity constraints impede the transport of coal from enormous basins in Shanxi, Shaanxi and Inner Mongolia or from the mountainous southwest to the industrial centers along the southern and eastern coast.

When thermal coal is prioritised, as it has been this year, steel mills suffer from a shortage of metallurgical or coking coal.

A bottleneck between the Northeast and the rest of China also means grains must compete with coal for rail capacity.

by Rujun Shen, Reuters.