China's domestic thermal coal market at northern transfer ports remained stagnant, with prices showing signs of fatigue amid muted buying interest, though supply-side constraints and persistent cost pressures continued to underpin sentiment, temporarily preventing immediate downward corrections.

Offers remained relatively firm at northern transfer ports, but actual transactions were thin. Offers for 5,500 Kcal/kg NAR coal were heard around 830 yuan/t, FOB with VAT, but trades remained scarce as buyers held back amid expectations of price pullbacks. Offers for 5,000 Kcal/kg NAR coal stood at 732-740 yuan/t, with several sellers offering small discounts to move cargoes.

"We are sensing more quietness in the market today. High-CV coal is not abundant, but there is simply no procurement appetite either," an eastern China-based trader source said.

"We sold some inventory during last week's price rally, but inquiries have thinned out this week and prices have stabilized," one Ordos-based miner source noted. He offered 4,500 Kcal/kg NAR coal ( S 0.6%) at 650 yuan/t FOB with VAT, with manageable inventory on hand and no urgency to offload at distressed levels.

Coal inventories across major northern transfer hubs hovered at a relatively high level for the same period in history, despite the latest destocking since mid-week, exerting pressure on storage capacity and prompting authorities to step up port clearance efforts.

At the same time, miners in key production regions continued to grapple with tight safety inspections following Shanxi's recent regulatory crackdown, keeping rail coal inflows at only moderate volumes, resulting in a temporary stalemate.

The market along the Yangtze River ports was also seeing some price weakness. "We're accelerating sales because inventories are high and the weather, alternating between rain and scorching heat, makes storage difficult," a local trader source said. "I think destocking will take time and prices will soften further."

Yet the deeper calculus for many traders remained not bearish over a slightly longer horizon. Ongoing mining clampdowns and the strict provisions of Shanxi's draft safety overhaul suggest production will remain constrained through the second half of the year. Some market participants warned that peak summer demand could revive supply tightness, capping potential price declines. 

"This year could see a less pronounced peak-season pattern, or even a reversal," a northern China-based trader source anticipated. "Power plants will likely restock on a hand-to-mouth basis while actively reducing inventories, leading to a slow drawdown at ports."

The trader expected portside prices to be flat in August with modest declines, followed by an accelerated downturn dragging down inventories in September, before a rebound toward October.

On July 24, the CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port was assessed at 827 yuan/t, FOB with VAT, unchanged day on day. The CCI 5000 index stood at 736 yuan/t, and the CCI 4500 index at 640 yuan/t, both flat from the previous day.

Import market drifts lower

On the import front, the mood was similarly subdued but not that bearish. Bidding prices to utility tenders for seaborne coal fell by 10 yuan/t or so from the previous week as traders competed aggressively for utility tenders, though some tenders were scrapped as power plants pushed for lower prices.

"Despite the decline, we find it hard to see a significant drop from here," a Fujian-based importer said. "Freight rates are unlikely to fall much given firmer crude oil prices, and FOB offers are also firm due to restrained export quota in Indonesia, so both buying and selling are quite challenging at the moment."

Indonesian 3,800 Kcal/kg NAR coal was heard offered by overseas sellers at around $64-65/t FOB on a Panamax basis and with delivering laycan in late August and early September. The Panamax freight rate from South Kalimantan to South China stood at approximately $9.5/t.

One state-run Chinese utility lately bought September-delivering Indonesian 3,800 Kcal/kg NAR coal at 576 yuan/t, CFR East China with VAT, translating to about $62.3/t FOB on a Panamax basis, and some 3,600 Kcal/kg NAR coal at 521 yuan/t, or $58.7/t FOB. A separate utility awarded a tender for the same grade coal at $63.3/t.

Meanwhile, Indonesian coal mines have reportedly submitted applications for additional RKAB quotas successively, waiting for the government to start the approval process in August. Some production volumes will be approved, and the supply is only expected to slightly increased.

For Australian 5,500 Kcal/kg NAR coal, offers were heard at $95-96/t FOB, though some sellers were being forced to accept lower prices to free up discharge slots at congested ports.

A second source in Fujian noted that high prices were proving difficult to move, with buying interest constrained by elevated stocks at receiving ports and cautious procurement among utilities in no rush to buy.

Sxcoal's data showed, Fangcheng port held 3.83 million tonnes of coal stocks as of July 24, surging 29.3% month on month and 23.1% year on year. Coal stocks at Guangzhou port stood at 3.39 million tonnes as of July 23, rising 6.1% and 12.9% respectively from the preceding month and the year prior.

"The coming weeks will be pivotal," a Guangzhou-based trader reckoned. "If summer power demand fails to materialize as expected, the combination of bloated port inventories and ample import arrivals could exert further downward pressure on prices."

On July 24, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stood at $62.5/t FOB and $73.2/t CFR South China port, unchanged day on day. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $113/t CFR.