China's portside thermal coal market displayed cautious optimism late in January, as sliding supply and emerging pre-holiday restocking encouraged some traders to lift prices, especially for low-CV and premium grades. Overall trading activity, however, remained restrained and highly selective, suggesting limited scope for a sustained price recovery.

On January 27, the CCI Index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port stood at 691 yuan/t FOB, unchanged day on day. The index for 5,000 Kcal/kg and 4,500 Kcal/kg NAR coal gained 2 yuan/t and 3 yuan/t respectively to 609 yuan/t and 521 yuan/t.

Demand proved relatively resilient for lower-CV grades. This, together with tight availability, prompted sellers to adopt a firm pricing stance. Sources said that some low-sulfur Ordos 4,500 Kcal/kg NAR coal was offered at roughly a 5 yuan/t premium to the CCI 4500 Index, while even some inferior-quality cargoes were heard quoted near index parity.

Offers of 4,500 Kcal/kg NAR coal hovered mostly at 520-530 yuan/t FOB with VAT, modestly above earlier levels, with a low-sulfur cargo changing hands at a high price of 531 yuan/t amid acute supply shortage.

Liquidities for high-CV grades remained stalled. Traders grew increasingly reluctant to cut prices, constrained by high inventory costs and emerging strength in the low-CV segment. Buyers, however, stayed cautious, unwilling to commit orders without clear price advantages. Transactions stayed muted as a result.

Participants noted that robust consumption at power plants, combined with still sluggish shipments from production areas to ports due to a limited arbitrage window, reinforced sellers' resolve to resist large discounts.

Data indicated that coal consumption elevated at power plants owned by six major coastal power groups, well above the year-prior levels. However, much of this year-on-year increase stemmed from the earlier timing of the Chinese New Year in the previous year, which had accelerated industrial shutdown and led to reduced power consumption.

Additionally, the anticipated gradual decline in supply from production areas, as more mines set a schedule for holiday leave, also offered some supply-side support.

Consumption throughout the first month so far has been far more volatile than in recent years, possibly affected by renewable power surges during their peak times, which led to compensatory rises in coal consumption during renewable lulls. This dynamic pointed to a lack of consistent and structural demand support, leaving a meaningful near-term price recovery unlikely despite the recent uptick.

Sentiment, therefore, tilted toward stability rather than strong bullish momentum. While some traders anticipated a short-term rebound driven by holiday-related restocking needs, the absence of solid bullish catalysts kept participants conservative. Several traders highlighted downside risks post-holiday should second-half February shipments ramp up significantly.

Some sellers appeared keen to lock in profit before the break, while buyers largely adopted a wait-and-see posture, restraining aggressive procurement.

Firm import market

The import segment exhibited greater firmness, underpinned by supply-side constraints. Low-CV Indonesian 3,800 Kcal/kg NAR coal maintained strong FOB levels around$ 50-51/t or higher (some offers were heard at a $3/t or so premium to the index), backed by weather disruptions on production and coal deliveries. Still pending RKAB approvals and export duties added bargaining power to Indonesian sellers.

Sources said that inquiries for the low-rank grade remained decent in China's import market, particularly after several power groups floated tenders seeking February-March delivery cargoes

Meanwhile, Australian high-CV coal offers saw marginal upward adjustments, buoyed by firmer domestic prices and pre-holiday replenishment.