China's portside thermal coal market started the week with continued stalemate on July 27. While high inventories and cautious buying limited further upside potential, the seasonal summer demand and production-area supply constraints also prevented any noticeable decline, leaving participants largely waiting for clearer signals.

At major Bohai-rim ports, trading activity remained subdued as sellers and buyers were locked in price negotiations. Port inventories stayed relatively high, and coal quality declined due to the recent rainfall, creating ongoing pressure to accelerate shipments and weakening bargaining power for sellers.

Sources said that power plants only made spot purchases when necessary, backed by high inventories and sufficient long-term contract supplies, leaving the overall liquidity thin.

Offers of 5,500 Kcal/kg NAR coal with sulfur between 0.5-1% at northern ports were heard at 830-850 yuan/t FOB with VAT. Sellers refused to cut prices due to high costs, while downstream inquiries were relatively muted at such levels.

Cargoes of 0.6%-sulfur 5,000 Kcal/kg NAR coal were heard quoted at 736-740 yuan/t, while some inferior blended same-CV coal was reportedly traded at 730 yuan/t.

Demand for 4,500 Kcal/kg NAR coal was slightly better, with cargoes largely available at premiums to the CCI 4500 index, sources noted. An offer of 0.6%-sulfur cargo was heard at 655 yuan/t, delivered to designated areas at ports, while buying indications were heard as high as 647 yuan/t, indicating the buy-ask spread was still curbing transactions.

Participants said prices were neither strong enough to move higher nor weak enough to trigger a broader decline.

On the supply side, domestic production has remained restrained, but participants generally expect no further significant declines in output. Some mines affected by safety inspections and production controls may gradually resume operations in Shanxi following a provincial meeting for orderly resumption during the past weekend.

High all-in delivered costs for new shipments to northern ports also provided cost support to the current price levels. Some trader sources reported that current delivered costs were higher than selling prices, limiting incentives to replenish port inventories. As a result, although demand remained inactive, sellers were largely reluctant to cut offers significantly, providing a floor for prices.

Additionally, some participants expected positive macro expectations to provide some underlying support, with the upcoming late July Politburo meeting raising expectations for further economic policy signals.

On the consumption side, demand from power plants have shown some regional improvement as temperatures rise, yet the ongoing typhoon season adds uncertainties to the sustainability.

Power plant sources in eastern China's Shandong reported that daily coal consumption reached a high level lately, driving inventories to fall fast and potentially prompting some local utilities to return to the market for replenishment.

However, China's National Meteorological Center forecast widespread rainfall over July 26-August 4 across large parts of southern, central, and northern China, with some areas seeing well-above-normal precipitation, capping near-term temperature gains and tempering power plant coal consumption.

Nevertheless, bearish factors remained significant. High inventories at northern ports and some southern ports have deferred large-scale restocking by utilities, while weak activity in non-power sectors such as the steel and construction material sectors has reduced additional coal demand. Rising hydropower output and stronger renewable generation have also partially offset the impact of higher electricity consumption during the summer peak season.

Participants anticipated the market to continue fluctuating within a narrow range while waiting for clearer signals from inventory reductions and downstream procurement.

On July 27, the CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port was assessed at 827 yuan/t, FOB with VAT, unchanged compared with July 24. The CCI 5000 index stood at 736 yuan/t, and the CCI 4500 index at 640 yuan/t, both flat.

Import market quiet

China's seaborne thermal coal import market stayed subdued, with buyers largely staying on the sidelines amid softened domestic sentiment.

Traders said recent pullback in utility tender prices, along with the stalled momentum in China's domestic market, have weighed on sentiment. Some Australian and Indonesian coal bids fell by over 10 yuan/t from a week, yet utility buying activities remained cautious after the drop.

Indonesian 3,800 Kcal/kg NAR coal continued to see subdued interest. Some traders were attempting short positions, betting on potential decline in freight rates, but most participants said the downside room appeared limited given current costs.

Indonesian 3,800 Kcal/kg NAR coal was assessed around $64/t FOB, with freight rates from South Kalimantan to South China around $9-10/t. Recent spot transactions included Indonesian 3,800 Kcal/kg NAR coal at around $63/t FOB and 3,600 Kcal/kg NAR coal at $60.5/t FOB.

Indonesia's coal supply outlook remained a key factor to watch. Mining companies have been submitting revised 2026 RKAB applications, with government approvals expected from August. If additional production quotas are granted, supply availability could gradually improve, but the timing and scale remain uncertain.

On the high-CV segment, offers of Australian 5,500 Kcal/kg NAR coal were heard at $96/t FOB, with Capesize freight rate to South China at about $18/t.

High stocks at southern ports continued to cap the urgency for additional spot purchases. Sxcoal's data showed that stocks at Guangzhou port rebounded again following a short-lived destocking earlier last week, sitting at 3.42 million tonnes as of July 24, a relatively high level in history. Fangcheng ports held 3.83 million tonnes on the same day, also a high level.

On July 27, 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 from late last week. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $113/t CFR.