China's domestic portside thermal coal market started the week with a marginally firmer tone, as a notable decline in rail inflows and rising cost support prompted a tentative rebound in offer prices, though actual trading remained conspicuously thin amid lukewarm downstream appetite.

Major Bohai-rim ports witnessed a marked reduction in new arrivals from railways, as it was increasingly economically unviable for port traders to haul coal from production areas following an earlier quick price pullback.

Sxcoal's estimate on July 10 pointed to a 40-60 yuan/t price inversion for port-bound shipments, with the gap expanding by 4-11 yuan/t compared with the week prior.

The average daily rail coal inflows at ports of Qinhuangdao, Caofeidian, Jingtang, and Huanghua for the week ended on July 10 fell by 15.5% from a week earlier to 2.81 million tonnes, according to Sxcoal's data. The decline was also partly due to heavy rainfall that impacted shipments on key rail lines.

Sources said that higher-priced old stocks were dominating remaining inventories at northern ports, underpinning a reluctance among holders to sell at concessional levels.

Offers for 5,000 Kcal/kg NAR coal with 0.8% sulfur were heard at 725-730 yuan/t or so, FOB northern ports with VAT, while bids from downstream buyers lingered around 720 yuan/t for similar-spec Shanxi material, underscoring a persistent gap between seller aspirations and buyer resistance.

The prevailing mood, however, remained cautiously optimistic among some traders, buoyed by expectations of a seasonal pick-up in power plant demand later in July and into August, alongside recent weather disruptions and geopolitical risks that lent support to international freight and oil prices.

Several trading houses reported higher offering levels, with 5,500 Kcal/kg NAR coal quoted at 815-820 yuan/t and 4,500 Kcal/kg NAR coal heard at 625 yuan/t, though actual deal-making remained scarce. Many buyers, particularly utilities, continued to favor procurement from major state-run coal groups over long-term contracts, which offered more competitive pricing, leaving spot market participants largely sidelined.

Yet the price firming met skepticism from some market participants, who saw the rebound as largely sentiment-driven rather than fundamental. One eastern China-based trader source noted that inquiries had increased, but most were from intermediaries rather than power plants.

Some market watchers warned that the current stabilization could prove short-lived, with a potential for renewed downside once the immediate supply-side disruptions ease, particularly as stockpiles at major northern transfer ports remained high despite the recent drawdown.

The total stocks at the four major ports were 28.65 million tonnes as of July 10, marking a 6% increase from the year-ago level and still hovering at a relatively high level for the same period in the past years.

With limited actual demand, persistent stock overhangs in key receiving regions, and a cautious macro backdrop that has some traders bracing for potential deflationary pressures in the second half, the market is likely to remain range-bound in the immediate future, with any meaningful recovery contingent on a genuine pick-up in utility consumption and sustained supply discipline from mining areas.

On July 13, the CCI Index for 5,500 Kcal/kg NAR coal stood at 802 yuan/t FOB with VAT, rising 2 yuan/t from late last week; the index for 5,000 Kcal/kg NAR coal and 4,500 Kcal/kg NAR grade were 710 yuan/t and 618 yuan/t, up 2 yuan/t and 3 yuan/t respectively.

Import market awaits clue

Indonesian low-CV cargoes continued to see relatively firm FOB offers, with 3,800 Kcal/kg NAR coal quoted at a premium of $2-2.5/t over index levels. The corresponding bidding prices in China's utility tenders also picked up, albeit marginally because of selling pressure for prompt cargoes.

Sustained high stocks at coastal ports in southern and southeastern China and prolonged vessel waiting time also weighed on the overall sentiment, offsetting limited support from the domestic price stabilization.

Some cargoes for Panamax late-July delivering 3,800 Kcal/kg NAR coal were heard traded at $62/t FOB, with certain traders willing to offer below the level to accelerate liquidity.

Freight rates for Panamax vessels from South Kalimantan to South China were assessed near $9/t, though participants flagged the risk of an upward move given renewed tensions in the Middle East, which could lift bunker costs and shipping premiums.

On the high-CV segment, sources reported buying interest from traders for Australian 5,500 Kcal/kg NAR coal at $93-94/t FOB, fueled by renewed expectations for peak summer demand and domestic mine-side price increases.

Sources reckoned that the market is likely to remain range-bound in the near future, with any meaningful recovery contingent on a genuine pick-up in utility consumption and sustained supply discipline from producers.

On July 13, the CCI index for Indonesian 3,800 Kcal/kg NAR coal was at $62.0/t FOB and $72.0/t CFR, unchanged from late last week. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $109.5/t CFR.