China's imported thermal coal market exhibited steady-to-firm sentiment in early February, supported by circulating sharp production curtailments and spot coal export halts of some miners in Indonesia.

Indonesian low-CV 3,800 Kcal/kg NAR coal was offered in the $50-51/t range FOB for Panamax shipments, according to trader sources, with select offers even reaching $52/t.

The key driver behind was the ongoing uncertainty surrounding Indonesia's 2026 coal RKAB approvals. Sources indicated that many miners have received RKAB allocations significantly below their submitted proposals, with reductions commonly reported in the 20-60% range, and for certain miners reaching 70-80%.

Sources said that Indonesian miners became increasingly reluctant to offer spot cargoes, and some major players even temporarily suspended spot coal exports, waiting for further clarity from the government, resulting in tighter spot supply. Long-term contract volumes, however, are reportedly still being honored.

"Spot offerings are scarce and miners, especially those facing sharp reductions, are hesitant to commit to any laycans, including existing contracts," said an Indonesian source.

Despite the supply-side concerns, actual buying interest from Chinese end users remained selective and price-sensitive appraoching the Chinese New Year holiday period.

Certain power plants in China have stopped releasing new tenders for imported coal after prices elevated, sources said. Most utilities were in no hurry to build stocks, with cargo delivery for recent tenders mostly in March. Sxcoal's tracking data showed that traders' bidding prices to utility tenders for 3,800 Kcal/kg NAR coal climbed to around 450-460 yuan/t CFR China with VAT, up roughly by 10 yuan/t from a week ago.

Sxcoal's estimate showed on February 3 that Indonesian 3,800 Kcal/kg NAR coal only enjoyed a delivered-to-South China advantage of 5.07 yuan/t compared with China's domestic equivalent on a CV-adjusted basis, narrowing by over 14 yuan/t month on month. Further contraction would reduce demand from Chinese power plants, leading to a shift back to China's domestic cargoes.

Meanwhile, some Chinese participants doubted the sustainability of the reduction and expected an eventual policy backtracking, as seen historically when the government faced strong resistance.

Some traders described the import market as having price support but limited liquidity. The prevailing views still considered substantial production cuts would provide a stronger medium-term floor, particularly for low-CV grades.

Positive sentiment also pushed mid- and high-CV coal prices higher, despite quiet activity. Offers for Australian 5,500 Kcal/kg NAR coal were heard around 710-720 yuan/t CFR with VAT South China, or $76-80/t FOB on a Capesize basis.

Several participants expressed the view that any eventual confirmation of large-scale Indonesian output reductions could exert significant upward pressure on low- to mid-CV import prices in the coming months, particularly if Chinese domestic inventories continue to draw down and demand resumes after the CNY holiday.

Domestic port trade remains subdued

Thermal coal trading activity was quite low at northern transfer ports, as an increasing number of traders adopted a holiday mode. With sentiment broadly stable, prices fluctuated narrowly around CCI indices, sources said.

Some traders showed little interest to undersell, concerning restocking difficulties at prices flat or lower than the current levels, even though demand from end users was inactive.

Port inventories have been on a downward trajectory in recent weeks, providing underlying support. Increasing production halts at mines for early holiday leaves also offered certain support, sources disclosed.

More traders expected limited price movement in the near term, shifting their focus to restocking momentum after the CNY holiday and clearer visibility on Indonesian supply.