China's domestic thermal coal market continued to search for a floor on July 6 as overall supply-demand dynamics showed no actual improvement. Ample coal stockpiles at power plants, combined with relatively mild temperatures, kept thermal coal consumption subdued, extending the downtrend in coal prices across key production hubs.

Of the 117 coal mines surveyed by Sxcoal on July 6, one mine raised prices by 5 yuan/t, while 25 mines lowered prices by 18.28 yuan/t on average. The remaining 91 kept prices stable.

As of July 3, corresponding CCI indexes of certain high-CV grades across China's top coal-producing regions cumulatively fell by 21-32 yuan/t since late June, primarily due to consistently tepid demand.

Power plants, the backbone of domestic coal consumption, saw coal burns lag behind year-ago levels despite regional heat waves. Daily coal burns at plants under six major coastal power groups stood at 786,300 tonnes on July 3, down 7.3% year on year, Sxcoal data showed.

Adding to the muted consumption, hydropower output across the Yangtze River basin remained high. Ample upstream water flows allowed hydroelectric facilities to operate at full capacity. The wetter weather is less likely to reverse immediately during the primary flood season starting July 1, which is forecast to generate above-average rainfall across both northern and southern regions through July and August.

Moreover, even as Typhoon Maysak weakened into a tropical depression on the morning of July 6, it still delivered heavy rainfall to certain southern provinces, further bolstering hydro generation and eroding the call on thermal power.

With inventories at coastal and inland plants hovering high, many coal-fired plants were keen on fulfilling long-term contracts and covered only urgent gaps through spot purchases, failing to underpin mine-mouth prices.

In addition, chemical and coking plants, though steady consumers, offered only marginal support. Their restocking remained need-based, with volumes capped by thin profits and cautious sentiment. Portside price declines also prompted many railway station-based traders to halt purchases due to unprofitable port-bound shipments.

As a result, a growing number of mines reported rising coal inventories amid sparse coal trucks, thus pressing down offers to boost sales.

In Inner Mongolia's Ordos, mine-mouth prices largely fell by 10-20 yuan/t after a leading miner's 13-15 yuan/t reductions in third-party coal buy prices starting July 3. Local washed coal (CV 5,000, S 0.3%) declined by 10 yuan/t to 515 yuan/t, ex-washplant with VAT. "Demand is moderate. Miners holding prices firm see thin truck loadings," a local miner noted, adding that the mine-mouth market did not find a bottom.

Miners in Shaanxi's Yulin followed suit, trimming prices for 5,900 Kcal/kg NAR slack coal (S 0.7%) by 10 yuan/t to 660 yuan/t with VAT on July 6. Certain lump grades witnessed sharper slides of 20 yuan/t.

Prices in Shanxi extended losses along with sliding portside prices. Downstream buying interest remained muted even post-cuts, as high inventories and sluggish demand continued to weigh on the market.

Shuozhou-sourced 5,000 Kcal/kg NAR slack coal (S 0.8%) dived by 15 yuan/t to 510 yuan/t, excluding VAT. "Coal offers exist, but few deals are concluded. Washing plants are reluctant to buy even at lower prices," a miner confirmed.

Nevertheless, a few mines that cut prices more aggressively were seeing a bit more truck arrivals. An Ordos-based miner even tested a 5 yuan/t price growth in washed coal (CV 5,800, S 0.2%), reaching 623 yuan/t, mine-mouth with VAT, citing increased offtakes.

Meanwhile, some participants managed to hold offers firm given the approaching summer peak. Southeastern China's Zhejiang province exited the plum rain season on July 3, with Shanghai and Jiangsu following suit starting July 6. As the rainy season gradually comes to an end across southern China, most parts of China are set to experience sustained high temperatures.

Together with the El Nino event, both the duration and intensity of this summer's heat are highly likely to exceed historical norms. This would push up residential cooling-related electricity consumption, thereby drawing down fuel stocks at power plants and bolstering restocking activity.

On July 6, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal at 685 yuan/t, mine-mouth with VAT, down 5 yuan/t compared to late last week, while Ordos 5,500 Kcal/kg NAR material fell 10 yuan/t to 600 yuan/t. Yulin 5,800 Kcal/kg NAR grade declined 5 yuan/t to 675 yuan/t.