Bullish sentiment was deepening in China's domestic thermal coal market following fresh price hikes from a leading miner. This, combined with ongoing supply tightness, prompted sustained and steep price gains across key producing hubs on August 31.

Of the 117 coal mines surveyed by Sxcoal on August 31, 35 mines raised prices by an average of 73.71 yuan/t, while zero mine lowered prices. The remaining 82 kept prices stable.

The top miner raised third-party coal buy prices by another 10 yuan/t on August 29, signaling that large buyers remained willing to chase scarce spot availability. The move brought additional fuel to weeks of mine-mouth rallies.

Price gains were more significant in Shaanxi's Yulin, with a handful of mines lifting quotes by 60-90 yuan/t over the weekend alone. 5,900 Kcal/kg NAR mixed coal (S 0.6%) was traded at 910 yuan/t on August 31, mine-mouth with VAT, jumping 60 yuan/t.

"Our sales have outstripped supplies, mainly because of small output of less than 2,000 tonnes each day," a local source told Sxcoal, adding that cargoes were moved directly to end users, including buyers from Shanxi.

In Inner Mongolia's Ordos, washed 5,600 Kcal/kg NAR slack coal (S 0.23%) advanced by 20 yuan/t to 780 yuan/t, ex-washplant with VAT. Miners noted that buyers continued to show up even after consecutive price increases.

"Demand has been relatively solid over the past couple of days, and prices keep climbing. The main reason is that many mines are suspended, so supply cannot keep up," an Ordos-based miner said.

The supply-side squeeze stemmed from multiple factors. Earlier rainfall forced most open-pit mines in northern mining regions to halt operations, while many operations completed August targets, causing visible declines in mine-mouth availability.

Safety inspections remained strict. Although some mines in Shanxi reopened after inspections, they were barred from exceeding approved capacity, keeping overall supply tight.

Some miner sources said they should meet long-term contract obligations while also supplying premium cargoes to the spot market, capping the tonnage available and making repeated price gains practical.

Meanwhile, import supplies, particularly Indonesian low-CV cargoes, were curbed by drought-induced transportation constraints and slow RKAB approvals, alongside high overseas offers. Coal inflows were insufficient to fill the domestic supply gap.

On the demand side, utility power consumption retreated from its seasonal peak but remained resilient. After typhoon activity passed, high temperatures returned to parts of eastern China. Much of northern China was seeing sunny days on August 31 with maximum temperatures around 30 degrees Celsius, according to meteorological forecasts.

Daily coal burns at power plants under six major coastal power groups have stayed above 940,000 tonnes recently, reaching 948,100 tonnes on August 28, a solid level for late summer. The figure ticked up 0.04% week on week and 2.20% month on month, and was still 0.30% higher than the year-ago level, Sxcoal showed.

Some generators with faster inventory drawdowns were restocking to offset summer consumption and prepare for winter procurement, gradually accepting higher prices. Some Shandong-based plants even raised buy prices by 15-20 yuan/t on August 30, further lifting market sentiment.

Demand from non-power sectors offered steady support. The completion of maintenance at coal-to-chemical facilities modestly increased consumption of chemical-purpose coal. Marked futures rallies in coking coal and coke also boosted blending coal needs. "Chemical plants made active restocking, and traders also built inventories, resulting in long truck queues at our mine," said an Ordos-based miner.

In addition, residential and building materials sectors started seeking raw materials ahead of the traditional September-October peak season, further boosting mine sales of mid- and high-CV coal and partially offsetting seasonal softness in power demand.

Nevertheless, some participants argued that the current rally was heavily sentiment-driven and underlying demand release remained moderate.

Thermal coal supplies are expected to recover entering September as mines resume after month-end suspensions and weather disruptions ease. Cooler weather forecasts and the unclear sustainability of end users to pursue spot cargoes also weigh on the near-term outlook.

On August 31, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal at 750 yuan/t, mine-mouth with VAT, up 10 yuan/t compared to late last week, while Ordos 5,500 Kcal/kg NAR material rose 50 yuan/t to 766 yuan/t. Yulin 5,800 Kcal/kg NAR grade gained 67 yuan/t to 893 yuan/t.