Thermal coal prices across China's key producing regions extended minor rallies post-holiday, buoyed by resumed restocking activities, as well as price hikes from a major coal producer.

Overall supply tightness provided a backbone to the current price rally. According to Sxcoal's latest weekly survey covering 160 thermal coal mines, the capacity utilization of these mines averaged 69.54% over February 19-25, contracting 15.92 percentage points from the pre-holiday level, a direct consequence of widespread holiday closures.

Although miners are gradually returning to work, the restart is still at a slow pace. This, coupled with stringent safety and environmental inspections anticipated ahead of the "Two Sessions", would cap considerable near-term supply influx.

Meanwhile, overall mine inventories hovered at relatively low levels, with total stockpiles at Sxcoal-surveyed mines decreasing 5.77% from the pre-holiday level to 3.74 million tonnes on February 25.

Producers primarily focused on clearing existing inventories to fulfill orders during the Chinese New Year holiday. Post-holiday sales resumptions at some mines, combined with rising portside prices, boosted offtakes to local railway stations and term contract buyers. Some speculative traders stepped up procurement, spurring brisk sales at mines offering competitively priced, premium thermal coal grades.

Simultaneously, some low-stocked end users placed small orders following depletion over the holiday. Potentially constrained import supplies could prompt some to turn to domestic materials, fueling further price rallies.

In Shaanxi's Yulin, online transactions mostly settled higher amid a notable increase in truck queues. 5,800 Kcal/kg NAR raw coal (S 0.7%) climbed 20 yuan/t to 552 yuan/t, mine-mouth with VAT.

Meanwhile, a leading Chinese miner raised third-party coal buy prices for 4,000-5,800 Kcal/kg NAR grades by 12 yuan/t starting February 25, reinforcing the upward momentum.

"The top miner's price rises boost market confidence and suggest essential restocking needs," according to a miner in Inner Mongolia's Zhunger. He lifted offers for 5,800 Kcal/kg NAR raw coal (S 0.2%) by 5 yuan/t to 580 yuan/t, mine-mouth with VAT.

An Ordos-based miner reported good demand for certain washed coal grades, with shipments by chemical plants active in recent days. As such, 5,800 Kcal/kg NAR washed coal (S 0.2%) advanced by 18 yuan/t to 556 yuan/t, ex-washplant with VAT.

However, some participants harbor divergent opinions about the sustainability of the uptrend. Heating demand in northern China will gradually taper off with rising temperatures in March. This, in turn, will diminish coal consumption at power plants.

The holiday period saw modest rebuilds of fuel stocks at many end users. Coal stocks at power plants under six major coastal power groups reached 13.82 million tonnes on February 25, up 2.28% from the pre-holiday level, Sxcoal data showed. This would alleviate any urgent pressure for large-scale coal intakes and prevent spot prices from substantial growth.

On February 26, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal and Ordos 5,500 Kcal/kg NAR material at 587 yuan/t and 532 yuan/t, respectively, mine-mouth with VAT, both up 5 yuan/t on the day. Yulin 5,800 Kcal/kg NAR grade gained 1 yuan/t to 599 yuan/t.