China's domestic thermal coal market at northern transfer ports showed further signs of weakening upward momentum, with selling interest creeping up while buying appetite remained measured. This shift in sentiment has offset support from safety checks at production areas and expectations of stronger power demand during the peak summer season.

Some participants said the recent price rebound has been largely driven by supply concerns and expectations of rising consumption, but high inventories at ports and power plants have prevented downstream buyers from restocking actively.

Trading activity remained subdued as a whole at major Bohai-rim ports on July 20, with sellers still dominating the market while buyers continued to take a cautious approach, sources reported.

A trader confirmed deals for 4,500 Kcal/kg NAR coal concluded at 655 yuan/t, delivered to portside designated areas over the past weekend, yet buyers only wanted to buy at about 645 yuan/t earlier on July 20, suggesting an already waning upward momentum.

For 5,000 Kcal/kg NAR coal, low-priced resources were increasingly difficult to secure. A Shanxi-based trader source said downstream buyers were offering some 745 yuan/t for 5,000 Kcal/kg NAR Shanxi coal (S 0.8%), but the supplier was reluctant to sell as its procurement cost remained around 770 yuan/t.

"Some vessels are gradually arriving at ports, and the market is closely watching whether the recent supply improvement can be sustained," the trader added, pointing to a strong sense of caution in the market.

Trading activity for higher-CV coal remained relatively stable. A second Shanxi-based trader source continued to sell 5,500 Kcal/kg NAR coal (S 0.6%) at around 840 yuan/t. "Demand was present, but buyers limited purchases to immediate needs instead of aggressively replenishing inventories. We also plan to sell off some cargoes gradually to keep our inventories at manageable levels," he noted.

The divergence between sellers and buyers has become increasingly apparent. Upstream suppliers remained relatively optimistic, citing continued impacts from mine safety inspections and rising transportation costs, while end users and some middlemen stayed cautious due to relatively high inventories at both ports and power plants.

Port inventory data suggested that the market still faced pressure from ample supply. Combined coal stocks at Qinhuangdao, Caofeidian, Jingtang and Huanghua ports stood at 30.62 million tonnes as of early July 20, rising 8.47% from the previous week and 13.25% from a year earlier, reaching the highest level for the same period in recent years.

The inventory build-up indicated that although coal consumption has improved, actual restocking remained lagged as high inventories at both ports and power plants, combined with stable long-term contract coal deliveries, have reduced the urgency for spot purchases.

Coal consumption at power plants under six major Chinese coastal power groups rose 5.39% week on week and 10.73% month on month as of July 17, reflecting stronger electricity demand. Their coal inventories declined slightly to 14.60 million tonnes, down 0.91% from the previous week, but remained above levels both last month and the previous year. Stock coverage stood at nearly 20 days, still offering a significant buffer against short-term supply risks.

On the supply side, flows have not yet tightened enough to trigger sustained destocking. The government has continued to encourage stable production to ensure adequate supply during the summer peak, and some mines previously affected by maintenance or safety inspections are gradually resuming operations.

The direction of prices through late July and August will largely depend on whether high temperatures can accelerate inventory drawdowns at ports and power plants and translate into stronger end-user procurement.

China has entered the peak summer power demand period, with temperatures expected to remain elevated across several regions. The weather bureau forecast persistent heat in some northwestern and central regions over the next 10 days, while broader heat waves are also expected across the middle and lower reaches of the Yangtze River and northern parts of southern China later this month, which could further lift power demand.

On July 20, the CCI Index for 5,500 Kcal/kg NAR coal stood at 824 yuan/t FOB with VAT, rising 3 yuan/t from late last week; the index for 5,000 Kcal/kg NAR coal and 4,500 Kcal/kg NAR grade were 734 yuan/t and 640 yuan/t, up 4 yuan/t and 2 yuan/t, respectively.

Higher import coal tender prices

In the seaborne import coal market, bidding prices to major utility tenders for seaborne coal were slightly firmer as higher freight costs amid renewed geopolitical tensions in the Middle East pushed up import costs, while elevated domestic coal prices also provided some sentimental support.

Several buyers have accepted higher tender prices, but most transactions involved forward cargoes rather than immediate arrivals.

For Indonesian 3,800 Kcal/kg NAR coal, prompt Panamax cargoes were offered at $63-64/t FOB for late July and early August delivery, while forward supplies were quoted some $2.5/t above the index. A trader said higher Panamax freight rates, currently around $10/t for Indonesian-to-China routes, had pushed up delivered costs even though FOB prices had not increased significantly.

On July 16, one southern utility awarded tenders for September delivery of 3,800 Kcal/kg NAR coal at prices netting back to around $62.8-63.6/t FOB. Awarded prices for Indonesian 4,500 Kcal/kg NAR coal were at $76.23/t FOB on a Panama basis with September delivery.

The utility also bought Australian 5,300 Kcal/kg NAR coal at prices equivalent to $91.09/t on a Capesize basis with mid-August delivery.

Sources reckoned that gains may be difficult to sustain as the actual pace of demand recovery remained slow, with high inventories at receiving ports in southern China and ample stocks held by power plants restricting further price increases, leaving the market likely in a rangebound phase rather than maintaining a firm upward trend.

On July 20, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stood at $62.5/t FOB and $73.5/t CFR South China port, unchanged from late last week. The index for Australian 5,500 Kcal/kg NAR coal was up $0.5/t to $112.5/t CFR.