While some Chinese thermal coal miners raised offers amid lean stocks on May 19, others trimmed prices after earlier run-ups met downstream resistance. Continuous negotiations between cautious buys and bullish summer demand expectations left the mine-mouth market in a stalemate.

Of the 90 coal mines surveyed by Sxcoal on May 19, eight mines raised prices by an average of 11.38 yuan/t, while one mine lowered prices by 20 yuan/t on average. The remaining 81 kept prices stable.

Despite minor declines in certain auction settlements, prices in Shaanxi's Yulin stayed relatively firm, supported by resilient chemical and metallurgical plants that maintained on-demand purchases. Chemical-purpose 5,650 Kcal/kg NAR material (S 0.6%) was traded at 681 yuan/t on May 18, rising 16 yuan/t from the last auction.

"Prices in Shanxi's Shuozhou also keep resilient. Coal prices are less likely to go down this year as we produce smaller volumes," a local source said.

Supply-side constraints were the principal driver behind thermal coal's strength this year. China's raw coal output fell 1.0% year on year and 12.5% on the month to 385.63 million tonnes in April, showed the latest data from the National Bureau of Statistics. Cumulative output in the first four months stood at 1.58 billion tonnes, dipping 0.1% from a year earlier, offering a solid floor to the mine-mouth market.

Most miners reported smooth operations, achieving a rough balance between production and sales. "Overall demand is good. Some washing plants are not active in purchases, but end users are still securing supplies," said a miner in Inner Mongolia's Ordos.

Daily coal burns at power plants under six major coastal power groups reached 764,400 tonnes on May 18, up 1.0% on the week and 2.4% year on year, Sxcoal data showed. The figure was 3.7% higher than the year-ago level. Given the upcoming peak summer season, some low-stocked generators turned to certain spot resources.

However, they were increasingly favoring cost-effective mines, with truck loadings reducing at a few mines with higher offers. Several power plants showed little urgency to chase spot cargoes, especially given steady inflows of term contract coal. As a result, partial online auctions faced headwinds in northern mining regions, retreating by 1-10 yuan/t.

Meanwhile, heavy rainfall and earthquakes in some southern regions also disrupted industrial operations, further compressing raw material demand. Meanwhile, temperatures across northern China are expected to stay below seasonal norms following earlier rains, restraining substantial gains in residential electricity usage.

Compounding the demand-side hesitation, expectations of domestic supply recovery are gaining traction. With the peak summer consumption period approaching, coal supply assurance returned to the forefront of policy discussions. Relevant authorities in both Shaanxi and Inner Mongolia focused on stabilizing output, stoking market anticipation of minor supply growth in the weeks ahead.

As such, the domestic thermal coal market is in a standoff. Future upside is capped by lackluster buying appetite, elevated buyer resistance, and potential supply increase, while the downside is also cushioned by minimal inventory pressure at mines and upcoming brisk summer restocking.

On May 19, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal at 694 yuan/t, mine-mouth with VAT, unchanged on the day, and Ordos 5,500 Kcal/kg NAR material kept flat at 573 yuan/t. Yulin 5,800 Kcal/kg NAR grade rose 3 yuan/t to 651 yuan/t.