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The China Coal Transportation and Distribution Association said the price of 5500 kilocalorie thermal coal at Qinhuangdao port dropped 2.7% to prices ranging from 725 yuan ($US114) a metric ton to 740 yuan – the biggest fall since March 2010.

China Daily reported coal stockpiles at Qinhuangdao port reached 9.33 million tons, the most since November 2008, adding that more than 8Mt was considered overstock at the port.

Qinhuangdao Coal Trading Center coal expert Li Xuegang said increased coal imports and falling demand were the chief reasons for the high inventory.

Qinhuangdao port was said to have added 580,000 tons to the coal supply since Sunday, which was one of the reasons behind the falling coal prices.

Downstream users, the six major power generators in China, have a total supply of 15.45Mt which is enough for more than 20 days, around double the standard supply.

The largest coal ports group, which includes the ports of Qinhuangdao, Huanghua and Tangshan, has a coal inventory of 16Mt and stockpiles have been on the increase since the start of June.

Hydropower generation grew 36% in May year-on-year, meaning thermal coal consumption fell by 8Mt, according to a National Development and Reform Commission statement.

China Daily quoted Hebei province-based coal trading company representative Chen Lihui as saying: "There is plenty of rain in the southern and eastern China, which helped hydropower generation increase. The thermal coal market now has low prices but no buyers."

He said his company had not had much business since March.

"The big power consumers, such as manufacturing companies and cement producers, have less production this year, which resulted in less power demand," he said.

"Sharply decreasing power demand from companies leads to falling thermal coal prices and a weak market."

The newspaper said according to customs data, China imported 86.55Mt of coal in the first four months, with a growth rate of 69.9% marking a record high.

Coal imports from Indonesia, South Korea and Canada all grew more than 50% in quantity, while imports from South Africa, Australia and Russia doubled.