China's mine-mouth thermal coal price gains tapered off on March 5 as cautious stance swept through the market. Miners offering larger hikes saw deteriorating sales, triggering minor downward corrections.

Initial restocking activities post-holiday fueled by essential needs boosted mine sales and spurred steady price increases at resuming mines. However, the upbeat sentiment has gradually given way to hesitation.

With a concentrated wave of replenishment complete, participants adopted a wait-and-see approach, casting a shadow over further upside.

Domestic thermal coal supply is ramping up as mine operations across major producing regions normalize. State-owned mines and most private ones have restarted full production and sales, with the remaining few yet to reopen expected to follow suit after March 3.

According to Sxcoal's latest weekly survey covering 160 thermal coal mines, the capacity utilization of these mines averaged 83.51% over February 26-March 4, climbing 13.97 percentage points week on week. The steady recovery in spot availability, though slightly lagging behind the pre-holiday level, added to prudent market stance.

Routine stockpiles at mines also increased along with normal production. Coal stocks at Sxcoal-surveyed mines reached 3.91 million tonnes on March 4, 4.49% higher than the week-ago level.

Chemical plants continued to buy on a need-to basis. However, some downstream buyers presented lower buying appetite for high-priced cargoes. Some miners hence reported diminished offtakes, although inventory builds remained minimal.

Despite the return of snowfall in parts of northern China, temperatures remained relatively warm. Northern regions are expected to enter a rapid warming pattern starting March 8. This, coupled with contracting residential heating needs, kept power demand lackluster.

Daily coal burns at power plants under six major coastal power groups stood at 697,300 tonnes on March 4, sliding 17.4% on the year, Sxcoal data showed. Against this backdrop, power plants with safe stockpiles showed little interest in spot supplies.

Furthermore, the portside market also calmed down. Downstream inquiries stayed tepid, and buyers were keen on pushing down buy prices, resulting in thin transactions at Bohai-rim ports. This weakness further dampened railway station-based traders' coal shipments from mines to ports.

Consequently, a miner in Inner Mongolia's Zhunger cut offers for 5,800 Kcal/kg NAR raw coal (S 0.2%) by 5 yuan/t to 540 yuan/t, mine-mouth with VAT, citing softening demand and the ripple effects of downward adjustments by a leading Chinese miner.

The producer slashed third-party coal buy prices for 4,000-5,800 Kcal/kg NAR thermal coal by 10 yuan/t starting March 4, further eroding market confidence.

Ordos-sourced 5,000 Kcal/kg NAR washed coal (S 0.3%) fell 9 yuan/t to 435 yuan/t, ex-washplant with VAT. "Mine-mouth prices haven't risen much, yet truck arrivals declined further," the source pointed out, ascribing minor price reductions to muted domestic demand.

Similarly, auction settlements in Shaanxi's Yulin showed mixed movements. A major miner raised prices for raw 4,400 Kcal/kg NAR slack coal (S 2.3%) by 10 yuan/t to 335 yuan/t, mine-mouth with VAT, while certain lump grades were heard traded at 15 yuan/t lower to 630 yuan/t.

Nevertheless, a freefall appears unlikely in the short run, as several miners managed to hold offers firm, supported by smooth sales and low inventories.

Moreover, rising international freight rates and constrained supplies capped imported coal arrivals, prompting end users to tilt some demand back to the domestic market. This would translate into a pickup in vessels heading north for loadings, providing a buffer against sharper declines.

On March 5, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal at 615 yuan/t, mine-mouth with VAT, up 2 yuan/t on the day, while Ordos 5,500 Kcal/kg NAR material dipped 4 yuan/t to 542 yuan/t. Yulin 5,800 Kcal/kg NAR grade remained unchanged at 609 yuan/t.