(Bloomberg) -- Coal prices in China may extend declines from a four-year low as high inventories continue to cast a shadow over the market.

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Stockpiles at major transportation hubs are near record-high levels, and more than a third higher than at the same time last year, according to the China Coal Transportation and Distribution Association. That threatens to further erode prices after a drop of more than a fifth in the past year.

“There’s no bright spot, prices may test new lows in coming months,” Xu Dongkun, a CCTD analyst, said at a briefing on Wednesday.

Aggressive buying from China and other Asian importers in the fall and lower consumption have left stockpiles high around the region at the onset of spring, forcing miners to slash prices to find interest. Power generation from fossil fuel plants fell in January and February, just the third drop for the winter period in the past 35 years.

Spot prices have yet to bottom out, Morgan Stanley analysts including Sara Chan said this week. Most Chinese miners could see losses if they fall below 400 yuan a ton, Bloomberg Intelligence said Thursday. That is about 40% below current levels.

State-owned giant China Shenhua Energy Co., China’s largest coal producer, this week reported a drop in profit and said it slashed its coal division budget and halted spot foreign coal purchases due to high inventories. Smaller miners are even more affected — with companies in key producing region Shanxi cutting salaries, downsizing or even shutting, according to industry news outlet Thermal Coal Group.

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