Thermal coal prices at northern Chinese ports have edged lower since midweek but are unlikely to see a sustained decline in the near term, with firm supply costs and cautious trading limiting the room for any significant pullback.

Trading at northern ports stayed subdued, as buyers took a cautious stance. Rising inventories earlier this week have weighed on sentiment, while the approaching end of the summer peak season has dampened expectations for further demand growth. Some traders, therefore, trimmed offers slightly to move cargoes, softening the overall market tone.

Even so, the scope for a sharp price drop remains narrow, as supply-side support persists. Production recovery in major mining regions has lagged expectations amid continued safety controls. While some mines have resumed output, their production remains below pre-suspension levels, leaving the overall additional supply yet to meaningfully ease market pressures.

Continued increase in mine-mouth prices, albeit at a slower pace, and resulting elevated all-in delivered costs for port-bound shipments also discouraged traders from cutting port offers aggressively.

Port inventories returned to destocking mode, justifying some sellers' resolution to hold offers. Stocks at Qinhuangdao, Caofeidian, Jingtang and Huanghua ports stood at 26.72 million tonnes on August 21, falling for a second straight day after several days of accumulation.

The decline reflected recovering vessel movements as weather disruptions eased and outbound shipments improved, though the decline has yet to offset the week-on-week accumulation in stocks.

Transactions stayed inactive as a whole at northern ports, with settlements largely below benchmark CCI indices. Offers of 4,500 Kcal/kg NAR coal were held relatively steady at 690-695 yuan/t, FOB with VAT, while a 1%-sulfur deal was heard done around 3 yuan/t discount to the CCI 4500 index.

Cargoes of 5,000 Kcal/kg NAR coal were largely quoted in a 765-775 yuan/t range, yet utilities' latest buy prices through tenders were heard at 760-765 yuan/t. Offers of 5,500 Kcal/kg NAR coal were reportedly around 870 yuan/t, while deals concluded at discounts of about 5-7 yuan/t for high-sulfur cargoes.

Sources said the discounted cargoes remained limited overall, as many sellers continued to face losses from inverted shipping economics from production areas to northern ports.

On the demand side, utility coal consumption has eased slightly from recent highs but remained temporarily resilient, largely backed by repeated bouts of high heat with oppressive humidity across some southern China. However, with temperatures expected to decline after late August, utilities are growing more cautious on spot procurement, with many buyers opting to wait rather than chase high-priced cargoes.

The non-power sector may offer some support in the weeks ahead. Chemical and metallurgical users are approaching their traditional September-October peak season and could begin restocking ahead of expected production increases.

Sxcoal's thermal coal market sentiment index eased to 0.78 on August 21, down from the previous day's slight gain but still below the August 7 peak of 0.92. Market optimism weakened amid slower trading, yet the index remained above the 0.5 breakeven line, indicating participants still hold mildly bullish expectations.

Overall, sources expect limited scope for sharp price corrections at northern ports in the near term. Constrained supply recovery, high replacement costs and sellers' reluctance to book losses should keep prices within a narrow range near term, with direction hinging on port inventory trends, mine production recovery and post-peak-season demand.

On August 21, the CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port was 860 yuan/t, FOB with VAT, unchanged day on day. The index for 5,000 Kcal/kg NAR coal stabilized at 769 yuan/t after two consecutive days of a 1 yuan/t dip, while 4,500 Kcal/kg NAR coal remained flat at 686 yuan/t.

Import market firm

In the seaborne import market, offer prices stayed largely firm on low supply availability from Indonesian mines and elevated overseas offers, even as buying interest from Chinese end users remained cautious given weakening price competitiveness.

Indonesia's supply outlook has shown little improvement, with revised RKAB quotas adding only limited availability, sources disclosed. Meanwhile, dry bulk logistics constraints continued to limit near-term supply flexibility, prompting overseas miners to largely maintain firm offers.

Indonesian 3,400 Kcal/kg NAR coal was quoted around $59/t FOB and 3,800 Kcal/kg NAR coal at $69-70/t FOB. Mid-CV coal remained scarce, making prices lacking advantage. Some 4,400 Kcal/kg NAR coal was heard offered at $82-83/t FOB, trader sources said.

One state-run utility bought some lower-CV cargoes through tenders on August 19, providing support to the overall market sentiment. The company awarded Indonesian 3,000 Kcal/kg NAR coal at a price netting back to $48/t FOB, 3,300 Kcal/kg NAR coal at roughly $57/t, 3,600 Kcal/kg NAR coal at around $64.7/t, and 3,800 Kcal/kg NAR coal at $69.6/t or so, all on a Panamax basis.

Some trader sources said despite these transactions, the imported coal market is still struggling to gain significant traction in China as utilities stay largely cautious at high price levels.

Australian high-CV coal also held firm, with 5,500 Kcal/kg NAR coal offered at approximately $98/t FOB. Offers on an ex-stock southern ports basis were heard at 920-930 yuan/t, 10 yuan/t higher than actual transactions.

Utilities' latest buy prices were heard at around 898 yuan/t, CFR South China with VAT. High inventories at coastal plants and expectations of softer post-peak demand, however, have limited appetite for large-scale buying.

Imported coal prices are likely to stay supported, but upward room is capped by cautious purchasing interest as buyers await clearer signals on domestic supply recovery and seasonal demand shifts.

The overall thermal coal imports in China for August are set to dip further. China imported 29.11 million tonnes of thermal coal in July, up 12.03% year on year but down 4.85% from June, customs data showed. Total imports over the first seven months reached 188 million tonnes, down 3.73% year on year.

Kpler data projects China's thermal coal arrivals at 24.34 million tonnes this month, down 5% month on month and 18.7% year on year, reflecting both weaker buying from utilities that have largely secured peak-season supply during earlier months and continued Indonesian supply constraints tied to quota limits and logistics disruptions.

On August 21, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stayed unchanged day on day at $66.7/t FOB and $78.2/t CFR South China port. The index for Australian 5,500 Kcal/kg NAR coal was also flat at $117.5/t CFR