Macquarie recently hosted a group of investors in China for a commodity tour of Beijing, Shanghai and Guangzhou where more than 25 speakers presented their views on the Chinese economy and commodity markets.

While a black cloud hung over the conference with even the most optimistic of presenters not anticipating any improvement before the end of this year, thermal coal was by far the most bullish with Chinese prices currently at a premium to international prices.

Macquarie said Shenhua suggested there would be a trend towards net imports over the next few years, with immediate relief in sight as domestic prices escalated and international prices slid.

However, it was noted that stock levels in the country are currently at comfortable levels, with some exceeding 30 days of consumption.

One speaker also suggested that some power plants in central China were using raw coking coal in their furnaces due to the collapse of washed coking coal demand by the steel industry.

On the big picture front, Macquarie noted: “The depth and duration of the downturn clearly remain open to debate, with most observers hoping for some improvement in 2009 (although whether that is early 2009 or late 2009 depends on the effectiveness of the Chinese policy response).”