China's domestic thermal coal prices at northern transshipment ports surged to their highest levels so far this year, driven by strengthening cost support, tight mine supply, and robust winter demand expectations.

On November 5, the CCI index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port stood at 795 yuan/t FOB with VAT, up 9 yuan/t day on day and marking the highest since December 16 of last year. The indices for 5,000 Kcal/kg and 4,500 Kcal/kg NAR coal also rose to over 10-month highs, settling at 700 yuan/t and 608 yuan/t.

The rally has been largely driven by rising mine-mouth prices, which continue to lift the cost for coal delivered to northern ports. "Rapid increases at the pithead are forcing port traders with low stockpiles to raise offers," said a Beijing-based trader source.

The momentum has been further supported by a leading miner's decision to increase third-party thermal coal buy prices, encouraging other miners to follow suit.

Strengthened mine-mouth activities have also pushed up truck freight rates, adding another layer to logistics costs for port-bound shipments.

While some well-stocked end users remained resistant to high-priced cargoes, a growing number of buyers have shown willingness to secure tonnages amid the strong upward trend.

Offers of 5,500 Kcal/kg NAR coal were heard at 800-820 yuan/t FOB with VAT northern ports, up by 20-25 yuan/t or so from late October. Trading activity also warmed up, with a low-sulfur cargo reportedly changing hands at 810 yuan/t. One buyer was heard bidding 820 yuan/t for premium low-sulfur coal of the same grade, yet most sellers held firm at around 825 yuan/t.

Tighter availability propelled low-sulfur 5,000 Kcal/kg NAR coal to 720-735 yuan/t, with deals already reported in the 720-730 yuan/t range.

"Low-sulfur material is increasingly difficult to source below 720 yuan/t," said a Zhejiang-based trader. "Many sellers are holding back, expecting further price gains toward year-end and an inability to replenish stocks at current levels."

Further underpinning the bullish sentiment was growing concerns over supply constraints in key production hubs, where safety inspections and anti-overproduction campaign have curtailed output.

"Some mines are unlikely to raise production under the stricter regulatory environment, and some participants even anticipate a supply contraction in the coming weeks, leaving the overall sentiment bullish," said a Shanxi-based miner source.

On the demand side, inquiries from power plants have shown a slight uptick. A cold wave forecast to move eastwards from West China over October 5-9 is anticipated to boost coal consumption for heating, further supporting spot prices.

Meanwhile, despite increased rail deliveries from production areas following the October 25 conclusion of Daqin railway's autumn maintenance, coal inventories at key northern ports of Qinhuangdao, Caofeidian, Jingtang, and Huanghua have held at approximately 23-24 million tonnes, reinforcing market tightness.

Sources said the market direction will largely hinge on production controls in major mining regions and inventory dynamics at both ports and power plants.

"With Beijing maintaining strict oversight on overproduction and traders anticipating colder-than-average temperatures in northern China, the market's short-term bias remains tilted upward," one Tianjin-based trader source pointed out.

As of 16:00 on November 5, Sxcoal's real-time thermal coal sentiment index stood at 0.96, indicating participants stayed mostly optimistic over the near term market. A reading above 0.5 signals a bullish market, with 1 being the most bullish.