Thermal coal prices at China's northern loading ports have risen fast in recent days, fueled by strong inventory-hoarding sentiment, ongoing rail allocation bottlenecks, and increased pre-holiday restocking. The rapid gains have already sparked concern among some traders that the rally may be overextended.

Traders reported rapid price increases on April 29, with 5,000 Kcal/kg NAR coal trading around 720-730 yuan/t and offers reaching as high as 737 yuan/t for low-sulfur grade. Cargoes of 5,500 Kcal/kg NAR coal were quoted in the 800-825 yuan/t range, with a trade already heard at the higher end. Some 4,500 Kcal/kg NAR coal fetched 645 yuan/t in port transactions, while offers hovered at 640-645 yuan/t.

Sources reported low levels of physical transactions at Bohai-rim ports despite the frenzy, with many holding back cargoes in anticipation of further gains driven by firming consumption. One trader noted that miners were largely reluctant to sell at lower prices, providing cost support to port prices.

Bohai-rim port inventories remained on a downward trend. Despite the daily transportation on the key artery Daqin railway rebounding fast to near a full capacity of 1.3 million tonnes just one day after it completed maintenance, a sustained high number of vessels waiting for load at ports kept the overall inventory on a downtrend.

Sxcoal's data showed the total stocks at Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports were 26.11 million tonnes as of early April 29, falling 3.16% week on week and 8% from the month-ago level. It also fell below the year-ago level by 16%.

Traders said the rail coal delivery schedule in some producing regions, especially Inner Mongolia, has been tight. One Inner Mongolia-based seller noted that the Hohhot railway bureau has been limiting additional cargo approvals after meeting its monthly haulage target.

"We couldn't get rail slots the last two days, as they're prioritizing their contracted shipments," one local trader source confirmed.

Some portside traders were holding back cargoes in anticipation of higher prices post-holiday. There were participants betting on a 30-yuan increase in May," a Tianjin-based trader source said.

However, a few sources flagged risks of a potential inventory rebound during the upcoming May Day holiday. As most of the ongoing inquiries were made by traders rather than end users and there were actually limited supply constraints at mines, the ongoing price rallies at ports were deemed as too aggressive.

Besides, with prices rising that high, some sellers were considering taking profit for partial inventories after the holiday, potentially easing pricing support by then. Some end users were pushing back, waiting for pullbacks next month.

Import market stalls at high prices

A sharp run-up in seaborne thermal coal prices into southern China has started to test buyer tolerance, pushing the number of failed utility tenders slightly higher.

While Indonesian low-CV cargoes could still find buyers, Australian 5,500 Kcal/kg NAR material has approached levels that many end users are unwilling to take, trader sources said.

Indonesian 3,800 Kcal/kg NAR coal was offered at $66-67/t FOB on a Panamax basis, up from $64-65/t last week, according to several traders. Factoring into freight of around $11.3–11.9/t from South Kalimantan, the landed cost into South China reached around 600 yuan/t, inclusive of VAT. Some buyers were thus pivoting to an alternative lower-CV grade of 3,600 Kcal/kg NAR coal.

Indonesian mid-CV coal has also become slightly more competitive than 3,800 Kcal/kg NAR coal, one Guangzhou-based trader source said.

Australian 5,500 Kcal/kg NAR coal was heard offered at $97/t, with Capesize freight at $19/t, bringing landed cost near 900 yuan/t, which discouraged end users' purchases.

"Major Chinese utilities, especially those in Guangdong and Zhejiang, have already covered most of their May requirements," said a Zhejiang-based trader source. "While showing slightly improved price tolerance—partly due to higher spot electricity prices—their overall buying enthusiasm is cooling."

A separate Beijing-based trader source noted that some traders have been purchasing Indonesian cargoes at $3/t above the benchmark index, but enthusiasm may not last at that level.

"Emotion is up, but import buyers are reluctant to chase prices at current levels unless a major global supply disruption occurs," a Guangdong-based buyer source said.