China's seaborne import thermal coal market softened, with utility tender bids drifting lower and more tenders failing to secure awards, though firm overseas offers underpinned by supply constraints limited the correction tentatively.

Sxcoal's tender tracking showed bids for Indonesian 3,800 Kcal/kg NAR coal falling to around 703 yuan/t, CFR South China with VAT, from roughly 710 yuan/t in the middle of the week. Bidding levels for Australian 5,500 Kcal/kg NAR coal slipped to about 1,049 yuan/t after a utility turned down a 1,059 yuan/t offer earlier in the week.

With a small volume of cargoes expected to arrive around the turn of the month and utilities inactive in building stocks, traders have selectively trimmed offers to offload and take profit, while power plants largely shifted to a wait-and-see stance.

Coal stocks at Guangzhou port, therefore, fell further to 2.09 million tonnes as of October 21, down significantly by 11.4% from the week prior and falling by 17.2% and 19.1% compared with the month-ago and the year-ago levels.

Sources said tender failures had become more frequent as coastal power plants, whose coal consumption showed seasonal weakness, balked at prevailing price levels, pointing to a possible near-term adjustment.

A trader based in southern China argued that imported coal prices have limited downside despite softer tender outcomes, citing high international oil and gas prices, constrained Indonesian availability under tight RKAB quotas, and slim prospects of Chinese domestic output returning to year-ago levels over the coming months.

"Overseas acceptance is still relatively good, which supports foreign miners' offers, but Chinese end users are not comfortable at current levels," one southeastern China-based trader source said. He disclosed that Panamax cargoes of Indonesian 3,800 Kcal/kg NAR coal reportedly sold to Indian buyers at $82/t FOB while China-bound material was negotiable near $81/t.

Offers for Australian 5,500 Kcal/kg NAR coal were heard at $116-116.5/t FOB, or about $2.5/t above the index. High delivered-all-in costs for seaborne supplies, with firm FOB offers and high freight rates, have prevented a noticeable decline in prices.

Freight rates for Panamax vessels from South Kalimantan to South China still hovered at a relatively high range, gaining by around $0.5/t week on week and exceeding their year-ago level by $2.54/t. Capesize freight rate retreated by some $0.7/t week on week yet was still over $6/t higher from the year-ago level.

While some participants anticipated a mild correction likely in the very near term, some remained confident in the mid-to-late November market, expecting prices to regain some strength by then due to seasonal increase in coal consumption.

On October 22, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stayed unchanged at $80.5/t FOB and $93.5/t CFR South China port. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $139/t CFR.

N China port prices set to dip

Domestically, thermal coal prices at northern ports are facing mounting downside risks, due to muted downstream purchases, mine-mouth price reductions, and accumulating northern port stocks, although some sellers still opted to hold offers broadly steady.

The market witnessed increased selling interest, as more traders sought to take profit. This led to fierce competition among sellers and a moderate decline in offers, although significantly low-priced cargoes remained scarce in the market.

Indicative levels held around 943-950 yuan/t, FOB northern ports with VAT, for low-sulfur 5,000 Kcal/kg NAR coal, while some high-sulfur cargoes were heard quoted at a 5-6 yuan/t discount to the CCI 5000 index. Deals were heard near 935 yuan/t, and a 50,000-tonne parcel of 0.8% sulfur cargo was awarded by an eastern utility at a price netting back to roughly 930 yuan/t FOB with VAT northern ports.

Sellers noted that mine price cuts had not yet fully reached the ports, so current portside price corrections remain temporarily small.

For 4,500 Kcal/kg NAR coal, offers for low-sulfur supplies were heard flat to the weekly average of the CCI 4500 index, yet found few buyers, while high-CV 5,500 Kcal/kg NAR were reportedly offered in the 1,040-1,050/t range due to tight availability, with deals heard at 1,040 yuan/t for 0.6%-sulfur cargoes.

Coal inventories at northern transfer ports increased by over 7% week on week, weighing on sentiment and fueling profit-taking. Some buyers became even more cautious in buying amid signs of price corrections, contributing to the quieter market.

While participants saw a growing likelihood of port price adjustments, they remained cautiously optimistic over the broader market, citing still restrained supply recovery due to the elimination of hidden working faces and safety restrictions on monthly production capacity caps, as well as the upcoming winter-heating season support.

On October 22, Sxcoal's CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port stabilized day on day at 1,040 yuan/t. The index for 5,000 Kcal/kg NAR coal stayed unchanged at 937 yuan/t and 4,500 Kcal/kg NAR coal flat at 837 yuan/t.