China's portside thermal coal market showed renewed signs of stalemate, with offer prices grinding to a near-standstill as elevated logistics costs and strong holding sentiment among sellers, clashing with measured downstream buying and growing portside inventory pressure.

Despite persistent bullish expectations for peak summer consumption, spot trading gradually thinned, with buyers mostly staying on the sidelines after prices reached comparatively high levels for the same period in previous years.

Spot offer prices were largely unchanged on May 12. "Some cargoes of Shanxi blended-5,000 Kcal/kg NAR coal with 0.8% sulfur are offered at 752-755 yuan/t (FOB northern port with VAT), yet buying interest is nearly nonexistent," said a Zhejiang-based trader source.

Another Hebei-based trader source concluded a deal of similar quality coal at 750 yuan/t. "Downstream buyers are all waiting for prices to drop, saying the ongoing heat wave in northern China, which is forecast to last for several days, won't bring much change," he commented.

Some participants also pointed to inventory rotation requests at Bohai ports as potential snags that could weigh on prices. "With substantial profits from earlier purchases, traders must rotate stocks; they cannot complete inventory turns without selling," one portside trader source said. "So we should see more spot cargoes entering the market gradually, which will cap any upside."

Port storage space has become tighter, and a few traders are facing pressure to clear old cargoes, sources said. Data from Sxcoal showed coal stocks at Qinhuangdao, Caofeidian, and Jingtang ports rebounded to 25.37 million tonnes as of May 12, hitting a near one-month high. Port inventories may keep accumulating, possibly through the end of May, owing to high rail coal shipments.

The overall market expectations remained relatively strong. "If there are some profit-taking cargoes, their drag on the prices would be moderate, possibly with only small corrections," noted a trader source from eastern China, adding another restocking chance will arrive.

Coal consumption at power plants under six major Chinese coastal power groups, though capped by seasonal weakness, remained at relatively high levels for the same period in several years, while their coal stocks hovered at relatively low levels, data showed.

Cost-side support meanwhile intensified, potentially providing a firm floor to portside offers. The Hohhot Railway Bureau has canceled logistics package discounts, switching to competitive bidding since May 10. Bidding starts 5% below original rates but has already reached 7-9% above, raising transport costs to northern ports by about 30 yuan/t, according to market sources.

Spot coal deliveries on some railway sections were severely squeezed by term coal shipments, meaning actual availability of salable spot cargoes would be restrained despite rising port inventories. Some suppliers are still preferring to hold back cargoes, with expectations largely aligned that prices will eventually rise further despite near-term stabilization or even corrections, Sxcoal understood.

Rumors circulated that a meeting will be held by authorities this Friday, potentially targeting production ramp-up and supply guarantee, adding a layer of uncertainty to the near-term market.

Import market sees early peak-season demand

The imported coal market is now outperforming domestic coal, given Indonesian supply remains tight and regional demand holds up.

Panamax Indonesian 3,800 Kcal/kg NAR coal was offered at $67-68/t FOB, with some June-loading cargoes being quoted at index plus $6.50/t.

"Indonesian coal supply is indeed tight, resulting in a real reduction in market availability. Traders are holding onto early-purchased tonnage, betting that peak-season demand will offer more lucrative exit points," a source at Fujian said, adding utilities will continue restocking, and the market looks great overall through August.

The spread between Indonesian 3,800 Kcal/kg NAR coal and domestic equivalents has barely disappeared, according to Sxcoal's estimate on May 11, meaning some coastal utilities will likely return to seaborne import cargoes once they have to build stocks.

Australian 5,500 Kcal/kg NAR coal was offered above $102/t FOB. "We're already selling cargoes for June-July loading. Landed prices are at 950 yuan/t (CFR south China with VAT), and we'll sell higher for July arrivals," a Beijing-based trader noted.

On May 8, a major state-run power group bought several April-delivering cargoes via tender, including 3,600-3,700 Kcal/kg NAR Indonesian coal netting back to $57.64-61.80/t FOB East Kalimantan on Panamax basis, and ultra-low 3,000 Kcal/kg coal at $45.80/t.

Russian 5,400-5,500 Kcal/kg coal was bought by the utility in at least two cargoes at a range of $94.80-97.30/t FOB Far East port.