The tentative rebound in China's domestic thermal coal market at northern ports showed signs of fatigue approaching the end of the week, as a renewed stockbuild and tepid end-user demand countered supply constraints in production areas, leaving traders split on the sustainability of further price gains.

The market, which had seen offer prices picking up earlier in the week on the back of reduced supplies from mines, witnessed a notable cooling in sentiment. Sellers largely stopped further raising prices and some became more willing to offload partial stocks.

Several trading houses reported that offers to non-end-user buyers, particularly state-owned coal groups sourcing third-party coal, have already softened by 5-7 yuan/t to accelerate liquidation, suggesting that the upward momentum was losing traction. One northern China-based trader source reported deals fetched around a 5 yuan/t discount to the CCI index, with delivery mostly within the next two weeks.

The inventory picture remained the primary factor to cap the overall upward potential. Combined coal stocks at the key transfer hubs of Qinhuangdao, Caofeidian and Jingtang totaled 26.69 million tonnes on July 16, up 1.3% week on week and marking the highest level for the day on record, according to Sxcoal data.

Outflows from these ports plunged 48.4% week on week, far exceeding a 13.1% decline in inflows during the same period, underscoring a lack of sustained and robust demand support, though Typhoon weather impacted shipments to some extent.

Despite the inventory overhang, some participants pointed to underlying cost support that prevented steeper discounts. Shanxi-origin coal remained relatively scarce at the ports, while the persistent loss of margins in shipping coal from mines to ports for sale discouraged fresh shipments and gave holders little incentive to offload at significantly lower levels.

Several producers in Inner Mongolia's Ordos basin noted buyers actively shifting raw coal sourcing to the region after many washing plants in northern Shanxi suspended operations due to raw stock shortages, keeping mine-mouth prices elevated.

On the demand side, a gradual recovery in power consumption provided some support, though not enough to trigger aggressive restocking.

The expansion of high-temperature weather fronts has accelerated the uptick in thermal power output, with regions such as East China beginning to see modest replenishment demand from both utilities and non-power industrial users, including metallurgical and chemical plants, Sxcoal understood.

Zhejiang province's peak power load reached a record 133 GW on July 16, with air-conditioning cooling loads exceeding 44 GW as the province logged its 41st day of load above 100 GW this summer.

Similarly, Shanghai's grid load hit a new high of 42.2 GW on the first day of the peak summer period, or "Sanfu", on July 15, with cooling demand accounting for approximately 44% of the total, while the rapid expansion of data center infrastructure added further upward pressure on electricity consumption, local media reported.

China's National Meteorological Center has forecast widespread searing heat across the Yangtze River basin and areas south of it from July 21, with maximum temperatures of 35-38°C, which is expected to provide a more tangible lift to coal demand later this month.

Hydropower generation, meanwhile, continued to retreat. Three Gorges outflows fell to 12,400 cubic meters per second on July 16, down 16.2% week on week and 38.6% year on year, forcing thermal plants to shoulder a greater share of the generation mix.

Yet the prevailing view among traders remained one of caution rather than absolute optimism. Many participants viewed the recent price uptick as a short-term corrective rebound following earlier sharp declines, rather than a fundamental turn, with some noting that the rally had been driven more by sentiment and cost pressures than by genuine end-user buying.

Sources observed that inquiries had increased but were largely confined to intermediaries, while actual end-user tenders remained sporadic. Several market watchers suggested that for prices to sustain further gains, high summer loads would need to persist for at least 10 days to visibly reduce the current hefty stockpiles.

As one participant put it, the supply side is now a known quantity, with all the usual bullish narratives already priced in; the key variable going forward is whether daily consumption rates can deliver the inventory drawdown that the market is anticipating.

On July 17, the CCI Index for 5,500 Kcal/kg NAR coal stood at 821 yuan/t FOB with VAT, rising 5 yuan/t day on day; the index for 5,000 Kcal/kg NAR coal and 4,500 Kcal/kg NAR grade were 730 yuan/t and 638 yuan/t, up 5 yuan/t and 3 yuan/t, respectively.

Import market faces ceiling

On the import front, a similar dynamic of rising offers meeting cautious buying played out. Sources said that power plants having some rigid restocking demand tended to be more receptive to higher prices, though the overall buying appetite remained modest as utilities have largely covered their August requirements, with some already sourcing September-arrival cargoes.

The lowest bidding prices to domestic utility tenders for Australian 5,500 Kcal/kg NAR coal were heard around 869 yuan/t, CFR South China with VAT, or $95.1/t FOB on Capesize basis, a level that buyers were reportedly willing to accept.

One Fujian-based trader source noted that domestic shipping constraints, with vessels tentatively queued at Huanghua port, were making it harder to source inland cargoes, indirectly supporting import demand to some extent.

Bids for Indonesian 3,800 Kcal/kg NAR coal were heard at 555-570 yuan/t, CFR South China with VAT, with the lowest translating to around $63/t FOB on a Panamax basis.

Sources said the rise in bidding prices was largely driven by elevated freight rates, while FOB prices from miners stayed broadly flat. The Panamax freight rate from South Kalimantan to South China climbed to $10/t or so.

Offers from traders for prompt Panamax 3,800 Kcal/kg NAR coal were heard at $63-64/t FOB or so, while forward cargoes with late August-September delivery were reportedly at a $2.5/t premium to the index.

However, southern receiving ports remained congested, with Guangzhou port inventories climbing to 3.38 million tonnes on July 16, up 0.7% week on week and 10.6% year on year. This continues to hamper price upticks and cap buyers' willingness to pay higher.

On the supply side, the outlook suggests a potential tightening in the months ahead, providing floor support to the seaborne import market.

Participants expect July and August arrivals to taper off from June's level, as Indonesian miners prioritize domestic fulfilment obligations during these months when additional RKAB quotas have yet to be added, while Australian shipments are likely to ease after a year-end rush in June. Russian supply faces headwinds from rising diesel costs that have lifted production expenses, prompting higher export offers for remaining cargoes.

On July 17, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stood at $62.5/t FOB and $73.5/t CFR South China port, unchanged day on day. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $112/t CFR.