Thermal coal market at northern China ports is showing signs of weakness, with scant downstream inquiries and traders increasingly willing to sell and some lowering offers to facilitate deals. The market mood, however, is not bearish, with limited room for price declines.

While sellers differ on the outlook, most agreed that both upside and downside are capped, with offers adjusted on a case-by-case basis and no trend-driven decline yet visible. Meanwhile, a major group kept its latest price increase, lending some support to the market.

End users remained on the sidelines with limited acceptance of current prices, resulting in thin trading. Most power plants maintained coal stocks above safe levels through stable long-term contract supply and, with profit margins narrowing, are discouraged by high-priced spot coal. Only sporadic spot purchases have been reported.

Affected by costs and structural issues in northern port stocks, high-CV and low-CV coal are faring differently, with high-CV coal showing more resilience and mid-to-low-CV coal relatively weaker.

High-CV coal held firmer offers as cargoes were scarce and shipping costs high, with sellers keen to defend prices. All-in costs for 5,500 Kcal/kg NAR coal from northern Shanxi were heard at 1,040-1,050 yuan/t, a clear inversion, providing support even as mine-mouth prices weaken. The costs for 5,500 Kcal/kg NAR coal from Inner Mongolia also exceeded 1,030 yuan/t.

Sellers were reluctant to sell cheaply amid elevated costs, slowly recovering mine-mouth supply, scarce spot cargoes, and low trader inventories. Anticipating possible winter stockpiling demand, most are holding out for better prices.

By contrast, mid-to-low-CV coal is more plentiful and less costly, while end-user demand is even weaker, with traders offering below the index but still struggling to conclude deals. Some 4,500 Kcal/kg NAR coal was offered to power plants at 8-11 yuan/t below the index, yet sales were challenging.

A Zhejiang trader on November 12 offered Shanxi blended 5,500 Kcal/kg NAR coal (1.0% sulfur) at 1,015 yuan/t, FOB with VAT at northern ports, with no interest and not even an inquiry. Shanxi blended 5,000 Kcal/kg NAR coal (0.8% sulfur) was offered at 910 yuan/t and Zhungeer 4,500 Kcal/kg NAR coal (0.8% sulfur) at 805 yuan/t, also without deals.

With demand sluggish and trading thin, coal stocks at northern ports have risen notably. Sxcoal data showed combined inventories at Qinhuangdao, Caofeidian, Jingtang and Huanghua ports totaled 26.41 million tonnes as of November 12, up 0.40% from the previous day and up 3.30% week on week.

Most market participants therefore expected a possible short-term pullback in northern port prices, but with the winter peak season underway and supply still low, a sharp decline is unlikely. Some traders, however, worried that accelerated mine restarts could leave no room for a rebound, potentially prompting more selling.

Sxcoal data showed on November 12 that the CCI index for domestic 5,500 Kcal/kg NAR coal at northern ports was 1,025 yuan/t, FOB with VAT, with 5,000 Kcal/kg NAR at 919 yuan/t and 4,500 Kcal/kg NAR at 805 yuan/t, all unchanged from the previous day.

Bearish sentiment grows in import market

The import market mirrored the domestic northern port market: high-CV cargoes were tight and more liquid, while low-CV cargoes were relatively abundant, but overseas offers held firm and Chinese utilities are pressing for lower prices, resulting in poor trading.

With domestic end-user demand weak and freight and international oil prices pulling back, bearish sentiment is growing, especially for forward cargoes, with participants generally downbeat on the outlook.

Australian 5,500 Kcal/kg NAR coal was heard offered at $116.5-117/t FOB on capesize basis, and Indonesian 3,800 Kcal/kg NAR coal at around $82/t FOB for Panamax cargoes, mostly for late-November loading.

Scarce spot supply, however, is seen limiting the downside for now. Import coal supply is expected to stay limited until mid-December. Newcastle port loading delays have pushed November cargoes back by 15-16 days. Although rainfall in Indonesia has increased, river water levels have not risen much, keeping shipping constrained.

Most market sources said the import coal market, like the domestic market, may see a modest short-term pullback, with the focus later on whether extreme weather materializes.

On November 12, the CCI 3800 Import index was unchanged day on day at $79.0/t FOB and $91.5/t CFR southern China ports. The CCI 5500 Import index was also stable at $137.0/t CFR.