Bullish momentum that had driven China's portside thermal coal market for much of this week showed signs of easing on July 16, with sellers starting to maintain prices as port inventory was built up again and continued measured downstream demand prompted some traders to accelerate sales, though most participants expect prices to gain further.

The cooling sentiment reflects growing recognition among port traders that the recent rally was largely sentiment-driven and may have run ahead of underlying fundamentals, with northern port inventories continuing to accumulate as rail coal inflows outpaced offtakes.

Sxcoal's data showed that the combined inventories at Qinhuangdao, Cafeidian, Jingtang, and Huanghua ports reached 28.83 million tonnes on July 16, rising for the third consecutive day following a week-long destocking. The figure remained at a record level for the same day in history.

While the average daily rail coal inflows fell by 8% week on week during the week ended July 16, the outflows registered an even sharper decline of 18.2%, Sxcoal data showed. Sources attributed this to fading trading enthusiasm after the recent price surge, which left some buyers adopting a wait-and-see approach once again.

Some traders who had held back sales in anticipation of further gains were now showing increased willingness to lock in profits, suggesting that the upward trajectory may be approaching a near-term ceiling.

Offers for 5,500 Kcal/kg NAR coal at northern ports were heard at 830-840 yuan/t, FOB with VAT, with some Shanxi-origin same-CV cargoes quoted at 850 yuan/t and above. Liquidity, however, was muted, as buyers avoided high levels.

Some 5,000 Kcal/kg NAR cargoes were offered at 730-740 yuan/t and 4,500 Kcal/kg NAR coal at 640-645 yuan/t. Trading activity remained thin as most utilities stood on the sidelines, leaving the market largely driven by speculative traders and a handful of tender requirements rather than genuine end-user demand, sources disclosed.

However, low-priced cargoes remained hard to find. One Hebei-based trader source rejected a buying interest for 5,000 Kcal/kg NAR coal at around 740 yuan/t, well below the cost of the stocks at 770 yuan/t or so. For lower-CV 4,500 Kcal/kg NAR grade, sellers remained reluctant to sell below 640 yuan/t, yet buying indications were largely below the line.

"We've been actively offloading cargoes this week, and it feels like the market is not as strong today as it was earlier in the week," an Inner Mongolia-based trader source said. He foresaw limited scope for further upside and held a cautious view on the near-term outlook.

One portside source observed that vessel anchoring at Bohai ports, excluding Huanghua, remained significantly lower than their week-ago levels, reinforcing the view that end users, particularly power utilities, have shown little appetite for spot market purchases.

The outcome of the coming weeks will hinge on whether the current regional heatwave in northern, central, and some northwestern China proves prolonged enough to meaningfully reduce utility coal stocks, which remain at relatively high levels and have allowed power generators to maintain a cautious procurement stance.

Data showed that coal consumption at power plants owned by six major coastal Chinese power groups stood at 0.85 million tonnes as of July 16, rising 5.68% week on week and 11.34% month on month. Their stocks started to fall, down by 1.27% week on week.

The overall tone tended to be slightly more cautious approaching the end of the week, with most participants anticipating that prices will hold around current levels or see only modest upward adjustments. A sustained decline, however, appears unlikely given ongoing support from cost, mine-side supply constraints, and the seasonal summer cooling demand, they noted.

On July 16, the CCI Index for 5,500 Kcal/kg NAR coal stood at 816 yuan/t FOB with VAT, rising 6 yuan/t day on day; the index for 5,000 Kcal/kg NAR coal and 4,500 Kcal/kg NAR grade were 725 yuan/t and 635 yuan/t, both up 6 yuan/t.

Import prices gain on sentiment and freight

The seaborne import market also saw price upticks, driven by rising coal prices in China and higher international freight rates, though actual uptake from Chinese utilities remained tepid given ample stocks at coastal utilities and narrowing price competitiveness.

Panamax Indonesian 3,800 Kcal/kg NAR coal was heard offered at $63.5-65/t FOB, with freight rates from South Kalimantan to South China rising to $10/t or so.

Chinese utilities's tender prices for this low-CV material with August-September laycan have risen to 555-575 yuan/t, CFR South China with VAT, a notable week-on-week increase due to rising costs. Some traders, however, noted that cargoes arriving in late July remained difficult to move as well-covered buyers were still reluctant to take.

"There are still plenty of prompt cargoes in the market," a South China-based importer source said. "We're still struggling to sell 3,800 Kcal/kg NAR Panamax cargoes at index plus $3/t and Supramax cargo at index plus $1.5/t."

Another source in the region observed that the recent price rebound was partly due to traders inflating prices, not actual demand.

On the high-CV front, Australian 5,500 Kcal/kg NAR coal offers were heard at $94-95/t FOB, with Panamax freight rates also ascending to $18-19/t, pushing delivered costs to China higher.

Meanwhile, Russian thermal coal supply faced potential headwinds from rising diesel prices that could lift production costs and constrain export availability in the coming months.

Kpler's cargo tracking data showed that the month-to-date seaborne thermal coal imports into China remained below half of the volume in June, with the projected whole-month imports falling by 5.8% month on month.

On July 16, 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 day on day. The index for Australian 5,500 Kcal/kg NAR coal was up $1/t on the day to $112/t CFR.