Sentiment in China's northern portside thermal coal market softened on October 20 as sellers struggled to liquidate cargoes at prevailing quotes, facing buyer resistance to elevated offers while some traders sought to lock in profits. Nevertheless, downside expectations remained capped by anticipated winter restocking needs and the lag time required for additional domestic supply to hit the spot market.

Offers for low-sulfur 5,000 Kcal/kg NAR coal were generally around 940-950 yuan/t, FOB northern ports with VAT, but buyers were increasingly reluctant to pay above 950 yuan/t. A northern China-based trader source reported cargoes sold to major mining groups at ports were done at discounts to the CCI 5000 index, while a buying indication for 1%-sulfur same-CV coal was heard 3 yuan/t below the benchmark index.

In the 4,500 Kcal/kg NAR segment, a 1%-sulfur cargo was offered at 840 yuan/t and failed to attract buyers, and indicative offers eased to around 835-840 yuan/t. A buying indication for the same-CV Ordos coal was heard at only 831 yuan/t.

A trader source in eastern China said the market had become difficult for high-priced cargoes, with 5,500 Kcal/kg NAR low-sulfur coal still offered at about 1,050 yuan/t, while a 0.6%-sulfur cargo reportedly changed hands at 1,045 yuan/t. Blended coal was available at even lower levels.

The weaker tone reflected limited spot buying, sources said, as downstream users remained unwilling to chase prices and inquiries were thin. Some sellers were looking to lock in gains after the recent rally, resulting in a slight increase in salable cargoes.

Supply-side developments added to the growing cautious mood. Despite reduced rail deliveries on the Daqin railway during its autumn maintenance, sources reported elevated volume at other rail lines, including in Inner Mongolia. This, paired with disruptions to offtakes at ports due to adverse weather, pushed inventories higher.

Sxcoal's data showed the combined stocks at Qinhuangdao, Caofeidian, and Jingtang ports reached 23.26 million tonnes as of early October 20, marking a 6.36% week-on-week rise and a 3.52% gain from the month-ago level.

Participants were divided over the near-term outlook. Some sources believed prices have reached a near-term high, noting that mine output is expected to rise further, although the increase would take time to translate into additional portside supply. Power plant coal consumption remained relatively subdued in its traditional slack season, limiting immediate buying interest at high price levels.

However, some market participants believed that meaningful supply gains would only materialize by mid-to-late November, leaving room for pre-winter stockpiling to trigger another upward price move in the interim. Temperatures this winter are forecast to be colder than seasonal norms in the southern part of China, potentially driving up air conditioning use for heating.

On October 20, Sxcoal's CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port gained 5 yuan/t day on day to 1,038 yuan/t. The index for 5,000 Kcal/kg NAR coal climbed 3 yuan/t to 937 yuan/t and 4,500 Kcal/kg NAR coal increased 2 yuan/t to 837 yuan/t, suggesting a continued narrowing in gains.

Import market softens

In the seaborne import market, procurement activity by Chinese power plants eased. Some tenders failed to secure awards as utilities weighed the prospect of higher domestic production and relatively low seasonal consumption.

Nevertheless, utilities still needed to cover near-term requirements, particularly cargoes that could arrive before mid-November, market sources said.

Australian 5,500 Kcal/kg NAR coal was offered at more than 1,050 yuan/t on a delivered-to-South China basis with VAT in China, while FOB offers were broadly steady at above $116/t.

Indonesian 3,800 Kcal/kg NAR coal was offered at around $82-83/t FOB, with a separate market indication putting delivered prices near $95/t CFR. Sellers reported limited near-term availability as Indonesian shipments continued to face logistical constraints and RKAB quota limits, which helped keep offers firm.

Some traders said softening in domestic prices could weigh on import sentiment if it continues, but overseas offers have so far stayed resilient. With Indonesian supply still constrained and Australian prices holding firm, imported coal prices were expected to fluctuate at high levels in the near term, although tender demand and the pace of China's domestic supply recovery remained key variables.

On October 20, 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.