China's thermal coal market at northern transfer ports remained locked in a narrow trading range on July 28, with structural shortages of Shanxi-origin coal and a quick pullback of inventory providing some price support, while inactive downstream buying continued to weigh on sentiment.

Some participants described the market as being weak in both supply and demand sides, with neither buyers nor sellers eager to act decisively.

At key Bohai-rim ports, the tight availability of Shanxi coal has become an increasingly important factor underpinning port prices. Although overall spot coal demand remained modest, available cargoes of certain specifications were becoming increasingly difficult to source, traders confirmed.

"Safety inspections in Shanxi have disrupted supply from some mines, leaving prices firm at high levels," one northern China-based trader source said. The estimated all-in-delivered costs of Shanxi 5,000 Kcal/kg NAR coal with sulfur around 1% currently stood at about 780 yuan/t, which was well above spot offers at 740 yuan/t or so, he added.

The shortage has also affected trading behavior. Some suppliers reported difficulty completing scheduled deliveries due to restricted mine output, forcing traders with shipping commitments to source alternative cargoes at other regions. As a result, sellers have become more reluctant to lower offers, especially as replenishing inventories after sales has become increasingly expensive.

For lower-CV material, a trader source at a northern port said 4,500 Kcal/kg NAR coal with 1% sulfur was difficult to secure even at around 645 yuan/t FOB with VAT, while some 0.6%-sulfur same-CV Ordos coal was heard to have changed hands at 652 yuan/t, delivered to designated port areas. A Jiangsu-based power plant recently purchased 4,500 Kcal/kg NAR coal at a delivered price of around 698 yuan/t, equivalent to slightly above 640 yuan/t on FOB basis.

Some blended Shaanxi 5,500 Kcal/kg NAR coal was heard offered 840 yuan/t, while single-mine same-CV resources were quoted at 850 yuan/t, which, sellers said, marginally picked up from earlier levels, though they were still open for negotiation.

Meanwhile, port inventories have started to decline, providing additional support for market sentiment. Sources noted that stronger outbound shipments, combined with improved coal consumption at some utilities, have accelerated inventory drawdowns. Some vessels delayed by previous weather disruptions have recently resumed operations, adding to liquidity at Bohai-rim ports.

Sxcoal's data showed that on July 28, Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports held 28.76 million tonnes of coal, falling quickly by 6.24% week on week, although the overall stocks remained at a comparatively high range for the same period in history. Daily coal offtakes during the week ended on July 28 surged by nearly 60% from the week-ago level, while the daily anchoring vessels also rose 45.7% week on week.

However, demand recovery remained uneven and moderate, the primary reason that rendered the market in a standstill. While some coastal power plants have increased consumption, many utilities continue to rely mainly on long-term contract coal and maintain only need-based spot purchases.

A power plant source in Jiangsu said its operating load had improved but remained unstable, with strong renewable generation limiting thermal power utilization. The recent typhoon weather has also, to some extent, suppressed the rise in temperature and curbed the increase in coal consumption of power plants. 

Traders generally expect prices to remain range-bound in the near term, with the direction depending on whether coal consumption can continue to rise post-typhoon and whether portside and end-user inventories decline meaningfully. The absence of broad-based restocking demand means that any price recovery or correction is likely to be gradual.

On July 28, the CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port was assessed at 827 yuan/t, FOB with VAT, unchanged day on day. The CCI 5000 index stood at 736 yuan/t, and the CCI 4500 index at 640 yuan/t, both flat on the day.

Import market stays cautious

China's seaborne import thermal coal market remained largely stable, with participants adopting a cautious approach as domestic supply constraints provided support while overseas supply conditions remained uncertain. Buyers continued to monitor the domestic market closely before committing to additional imports, particularly for forward cargoes.

Indonesian 3,800 Kcal/kg NAR coal was offered around $64-65/t FOB, with delivered economics remaining relatively competitive against domestic alternatives in southern China.

However, high inventories at coastal utilities and prolonged congestion at southern ports and uncertainty over future demand have limited buying appetite. Market participants said current transactions were mostly driven by existing requirements rather than positive stock building.

Indonesia's RKAB approvals remained one of the major uncertainties in the market. Traders said some mining companies were still waiting for government approval of additional production quotas, while incremental output from larger producers remained uncertain. Some sources noted that newly approved volumes may have limited impact because a portion of the additional production would need to meet domestic obligations, reducing export availability.

Freight rates also continued to influence import economics. Indonesian coal traders reported freight levels at $9-10/t for routes into southern China. Some buyers remained cautious because any further changes in shipping costs could alter import margins. Although some participants expected a decline in Indonesian coal prices, many believed downside room was limited due to firm landed costs and uncertain supply growth.

Australian 5,500 Kcal/kg NAR coal was offered around $96/t FOB, with freight rates at $18/t or so. Some importers reported a delivered cost of 875 yuan/t, CFR South China with VAT. Some distressed cargoes were forced to offer at a low of 850 yuan/t to boost liquidation, but sources added that sustained supply at this price appeared limited.

On July 28, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stood at $62.5/t FOB and $73.2/t CFR South China port, unchanged compared with a day earlier. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $113/t CFR.