Thermal coal prices at northern Chinese ports held steady on June 8, supported by fresh regional mine-mouth price increases over the weekend that slightly raised port-delivered costs. However, persistently weak downstream demand and high port stocks continued to constrain any meaningful rebound.

A few mines in key production areas started to raise prices moderately over the weekend, encouraged by improved purchases from some non-power users and a few rail station-based traders following earlier price reductions, alongside continued safety inspections.

One Shanxi-based trader source offered 5,000 Kcal/kg NAR coal (1% sulfur) at parity to the weekly average of CCI 5000 index, temporarily reluctant to accept buying indications below benchmark levels. Several deals for high-CV grade were heard at a 3-5 yuan/t discount to the index level.

Inquiries were also reported for 0.8%-sulfur 4,500 Kcal/kg NAR coal, yet relatively tight spot availability for low-sulfur and low-CV grade prompted sellers to hold offers largely around 685 yuan/t, FOB northern port with VAT, a level that left most buyers in a wait-and-see approach.

Sellers noted the market lacks upward momentum but is equally reluctant to decline, with prices expected to stay range-bound in the near term. With downstream buyers pressing for concessions and sellers unwilling to yield ground amid rising costs, this protracted deadlock is expected to persist in the near term.

Sources also identified elevated stockpiles at key Bohai-rim ports as one of the key factors that partially offset cost support and continued to weigh on prices.

Combined inventories at Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports stood at 28.80 million tonnes as of June 6, up 0.82% week on week and 7.11% above the preceding month, on track to reach the historical highs for the same period in recent years, Sxcoal data showed.

Meanwhile, coal consumption at both inland and coastal power plants continued to climb and well-exceeded their year-ago levels. High spot prices together with sufficient long-term contract coal supply continued to constrain their appetite for spot supplies.

Some sources reckoned that, if coal consumption continues to rise, power plants will likely be forced to purchase coal in the spot market. They foresaw that coal prices would remain on an upward trajectory this summer, with limited downside risks.

On June 8, the CCI Index for 5,500 Kcal/kg NAR coal stood at 865 yuan/t FOB northern ports, flat compared with late last week; the index for 5,000 Kcal/kg NAR coal both unchanged at 774 yuan/t and 4,500 Kcal/kg NAR coal at 675 yuan/t.

Seaborne import market softens

The seaborne import market softened further, with prompt low-CV Indonesian cargoes under pressure from ample supply and elevated southern China port inventories. Forward prices still held firm on expectations of tighter supply in the second half.

Prompt 3,800 Kcal/kg NAR cargoes were heard offered in a range of 588-610 yuan/t CFR South China with VAT. Some sellers offered distressed cargoes already nearing Chinese ports lower to seek liquidation to avoid mounting demurrage.

Southern port congestion is still causing discharging delays of at least 4-5 days, and the situation is likely to persist until mid-June, said a local trader source. He anticipated that prices would not recover until the pressure from spot cargoes eases.

"For now, there are no obvious bullish drivers," the trader noted. "The near-term direction of the market would hinge on evolving downstream burn rates."

One source from a South China utility disclosed that prompt offer prices of Indonesian 3,800 Kcal/kg NAR coal could barely cover generation costs, and added that the company has no appetite to import higher grades at present.

Forward cargoes were still offered at relatively firm prices, with some July-delivering Panamax 3,800 Kcal/kg NAR cargoes at index plus $3/t.

A Fujian-based participant expected a shortfall of low-CV coal imports to emerge in the peak summer period, pointing to Indonesia's new DSI export reporting regime, with the transitional period from June through year-end.

One leading utility in southern China reportedly took six July-delivery 3,800 Kcal/kg NAR cargoes at 617 yuan/t, CFR South China with VAT, equivalent to roughly $68.5/t FOB.

For higher-CV material, transactions were heard for Australian 5,500 Kcal/kg NAR coal at $125-126/t CFR South China. Miners were said to be unwilling to offer fixed-price terms amid a relatively positive outlook.