China's domestic thermal coal prices at northern transfer ports stayed broadly resilient, though a slight discrepancy was observed between low-sulfur and high-sulfur grades.

Sources confirmed that offers were largely firm at northern ports, fueled primarily by the ongoing constraints in rail coal inflows during the month-long Daqin line spring maintenance. The reduced inflows have triggered a drawdown of port inventories, emboldening traders to hold their ground on pricing.

Recent transactions showed that high-quality, low-sulfur coal remained the primary driver for the slight upward momentum emerged in the market. A cargo of 5,000 Kcal/kg NAR coal with 0.6% sulfur was reportedly traded at 695 yuan/t, FOB northern port with VAT, though sellers flagged increasing difficulties in pushing prices toward the 700 yuan/t psychological threshold.

High-sulfur or blended coal, however, continued to struggle, often requiring discounts against CCI benchmarks to clear stocks. A Datong-based trader reported a deal to a leading mining group for mixed 5,500 Kcal/kg NAR coal with 1% sulfur at a 5 yuan/t discount to the CCI 5500 index.

Additionally, sellers were seen as in no rush to liquidate low-sulfur Shanxi coal stocks due to their stable quality, leaving prices of these grades generally firm, while certain Inner Mongolian cargoes were being partially offloaded due to higher risks for spontaneous combustion, Sxcoal understood.

The broader market was caught in a tug-of-war, with traders citing high costs and rail bottlenecks as reasons to maintain or raise offers. Relatively high offers of imported seaborne cargoes, alongside uncertainties in international freight rates amid the escalated regional conflicts, also added support to domestic prices.

Power plants, however, were pushing back or stayed sidelined. High domestic mine production and the potential increase in hydropower and solar output would act as a ceiling on demand gains, limiting the likelihood for any significant price movement in either direction.

Import arbitrage vanishes

The imported coal market was currently described by Chinese trader sources as chaotic, characterized by a complete closure of the arbitrage window, from low-to high-CV grades.

Offers for the traditionally popular seaborne 3,800 Kcal/kg NAR cargoes remained stubbornly high, hovering at $62-63/t FOB, driven by tight supply in Indonesia and relentless geopolitical tensions in the Middle East that have bolstered global energy benchmarks.

"It is a market where you can neither buy nor sell profitably," said a trader source from Fujian. "Indonesian miners are holding firm due to limited export quotas and strong domestic obligations, while Chinese utilities are largely walking away from tenders because the landed costs are simply too high."

Sxcoal's estimate showed a widening gap between imported and domestic resources. On April 13, Indonesian 3,800 Kcal/kg NAR coal was nearly 15 yuan/t more expensive than domestic 4,500 Kcal/kg NAR coal, on a CV-adjusted and delivered-to-South China basis, expanding by 5.3 yuan/t week on week.

Sources reported a continued shift of buying interest to lower-CV grades, with certain cargoes of 3,600 Kcal/kg NAR coal selling even at a $4/t premium to the index. Yet the overall buying interests remained to be seen, with lots of recent utility tenders for May delivery ending in no award because of high prices.

While demand in South China remained slightly more resilient than in other coastal regions, the overall lack of urgency from state-run power plants, which currently boast comfortable coal inventories, suggests that imported coal may also be rangebound in China for the remainder of April.

Australian high-CV thermal coal was heard traded at $89-90/t FOB by traders for speculation purposes. Sources estimated the CFR China costs at 820-830 yuan/t CFR China, while utilities' buy levels through tenders were heard at 824 yuan/t for the highest so far.