Reported by the South China Morning Post newspaper, the deadlocked negotiations have resulted in a rapid fall of inventory at China’s largest coal port in Qinhuangdao, where stockpiles were down 46% on Friday to 4.99 million tonnes compared to the mid-November peak of 9.23Mt.

While the nation’s power consumption is yet to regain ground from falls over the last three months, including a drop of nearly 9% in December year on year, China Coal Transportation and Development Association data revealed the lower stockpiles had lifted spot prices in the country.

Notably Shanxi premium blend coal at a heating value of 5500 kilocalories per kilogram has risen to a spot price of 600 yuan a tonne ($US87.74/t), some 17.6% higher than the mid-December low of 510 yuan ($US74.57/t).

Chinese analysts are mixed on more possible price rises, but Nomura Securities analyst Donovan Huang told the newspaper the power companies were more likely to obtain a favourable outcome as the negotiations with the coal producers drag on.

While cuts in Chinese coal production have played a role in reducing stockpiles, spot prices could suffer from further drops in electricity demand after the current Chinese winter season.