China's domestic thermal coal market showed tentative signs of recovery on November 17 following a week of minor price cuts. Despite prevailing caution, a handful of miners in key producing hubs tested modest rises as a cold wave swept across the nation.

Of the 90 coal mines surveyed by Sxcoal on November 17, ten mines raised prices by an average of 15 yuan/t, compared to three mines late last week. Six mines lowered prices by 17.17 yuan/t on average, while the remaining 74 mines kept prices stable.

The past week was overshadowed by a growing number of miners cutting prices, as rapid and considerable thermal coal price rallies since early November had starkly outpaced the growth in actual downstream demand. End users were increasingly resistant to elevated costs, diminishing trucks sent to mines and pressing down buy prices.

Some miners in Inner Mongolia continued to lower offers by 5-10 yuan/t at the beginning of this week amid sluggish sales, with washed slack grade down 10 yuan/t to 708 yuan/t.

However, several participants anticipated that the further downside room will be restrained by steady shipments to long-term contract buyers and minimal inventory pressure. Some producers even confirmed acceptable truck loadings post-reductions, making a sharp downturn unlikely. The mine-mouth market presents a mixed but subtly shifting picture, market sources acknowledged.

The most immediate catalyst for change was the powerful cold front, forecasted by the National Meteorological Center to bring widespread temperature drops of 6-16 degrees Celsius over November 17-21. The cold wave is expected to push temperatures in northern, central, and eastern regions, as well as some southern areas, to their lowest levels in the second half of the year.

Consequently, residential heating demand would climb substantially. Coupled with diminishing hydropower output, coal-fired power generation is set to gain strength, driving up coal consumption. Moreover, the industrial sector also bolstered electricity and coal usage during the year-end production sprint.

Coal inventories at power plants under six major coastal power groups were 7.2% lower than the year-ago level as of November 14, spurring restocking needs along with increasing coal burns.

In addition, thermal coal supply-demand fundamentals were still tightening. Stringent safety inspections and ongoing efforts to curb overmining persistently capped capacity release. Such supply constraints are projected to intensify as some private and smaller mines halt or cap operations by the year-end. This sets the stage for demand rebounds as the sector gradually enters its traditional peak season.

Several miners, encouraged by favorable demand signals, began raising offers slightly. A Zhunger-based miner lifted prices of 5,800 Kcal/kg NAR raw coal (S 0.2%) by 3 yuan/t to 633 yuan/t, mine-mouth with VAT, citing growing purchases of high-CV materials.

Upward adjustments were more pronounced in Shaanxi's Yulin, especially at those mines enjoying decent truck arrivals. 5,900 Kcal/kg NAR slack coal (S 0.32%) rose 10 yuan/t to 650 yuan/t, mine-mouth with VAT.

Online auctions also heated up. 6,000 Kcal/kg NAR slack coal (S 0.6%) was heard concluded at 660 yuan/t, climbing 20 yuan/t, while certain lump grades even jumped by 30 yuan/t, indicating growing market confidence.

On November 17, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal and Ordos 5,500 Kcal/kg NAR material at 680 yuan/t and 617 yuan/t, respectively, mine-mouth with VAT, unchanged compared to late last week. Yulin 6,200 Kcal/kg NAR grade gained 7 yuan/t to 679 yuan/t.