China's mine-mouth thermal coal market trended downwards on June 2. Minor reductions were observed across major producing regions after downstream buyers balked at rapid run-ups.

Of the 117 coal mines surveyed by Sxcoal on June 2, eight mines raised prices by an average of 21 yuan/t, while 13 mines lowered prices by 11.08 yuan/t on average. The remaining 96 kept prices stable.

The pullback followed a week of price hikes set in motion by the Shanxi mine accident in late May, which triggered widespread safety inspections and shrinking spot availability.

Operating mines tested sustained price increases last week, with corresponding CCI indexes across major thermal coal hubs accumulating substantial gains of 33-52 yuan/t since May 25.

However, as resistance from downstream buyers intensified, purchases and mine offtakes slowed. As such, mines with elevated prices began lowering offers, while only a few managed marginal upward adjustments.

Entering June, more mines returned to production to fulfill new monthly tasks. Meanwhile, the government also laid out arrangements that prioritize coal and natural gas production during the peak summer period and ensure peak-load generation requirements are met. As such, expectations of steep supply slides eased.

On the demand side, apart from essential restocking, the mine-mouth market was dominated by a wait-and-see sentiment.

"Demand remains subdued. Chemical plants still make essential buys, while traders largely retreat from the market," said a miner in Inner Mongolia's Ordos. He had to lower offers by 8-19 yuan/t on June 2, with washed 5,800 Kcal/kg NAR coal (S 0.2%) down 10 yuan/t to 618 yuan/t, ex-washplant with VAT.

Similarly, in Shaanxi's Yulin, truck arrivals declined notably as prices jumped too fast. A major miner trimmed offers by 20 yuan/t, with raw slack 4,400 Kcal/kg coal (S 2.3%) hitting 455 yuan/t, mine-mouth with VAT.

Nevertheless, some participants viewed the current softening not as a broader downtrend but as rational corrections following prior spikes.

The supply impact of the late-May accident did not fully dissipate, and June is China's 25th work safety month. In the near term, operating rates across northern mining areas are expected to be capped, with tightened safety inspections sustained. Shanxi, in particular, is feeling the effects acutely.

A Shuozhou-based miner reported halting production late last week, with the timing of any restart uncertain. "We are in no rush to cut prices," he added.

At the same time, summer heat is intensifying. High temperatures are set to reach the widest expanse today, with localized maximums in the north hitting 39 degrees Celsius. Southern regions are also expected to face a prolonged heatwave.

Daily coal burns at power plants under six major coastal power groups stood at 815,200 tonnes on June 1, up 2.6% on the week and 10.5% on the month, Sxcoal data showed. Despite minor fluctuations, overall electricity consumption is set to climb further during the summer peak, further feeding bullish stance in the market.

The strong sentiment pulled forward end-user restocking, with traders and washing plants also holding large inventories, which provided a floor for mine-mouth prices.

On June 2, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal at 725 yuan/t, mine-mouth with VAT, unchanged on the day, while Ordos 5,500 Kcal/kg NAR material dipped 6 yuan/t to 607 yuan/t. Yulin 5,800 Kcal/kg NAR grade dropped 5 yuan/t to 696 yuan/t.