China's seaborne import thermal coal market maintained a firm tone in early January, underpinned by a tightening supply from Indonesia and further buoyed by a strengthening domestic market.

The supply squeeze from the world's largest thermal coal exporter mainly stems from ongoing delays in the approval of the 2026 work plans and budget (RKABs) and the ban on coal transportation on public roads in the country's third-largest coal-producing province, South Sumatra. This has curbed spot availability, forcing Chinese buyers with short positions to actively cover their requirements.

"Supply from some small and mid-sized mines in South Sumatra has been cut by more than half due to logistics curbs," a Fujian-based importer source disclosed.

Indonesian 3,800 Kcal/kg NAR coal offers strengthened to $49-49.5/t FOB for Panamax cargo, with some deals reportedly settled at $48-49/t. Traders widely believe prices will stay elevated until Indonesian authorities resolve the permit issues.

The rally also spread to the high-CV segment. Australian 5,500 Kcal/kg NAR coal witnessed stronger offers ranging $75-77/t FOB, with some optimistic participants suggesting it could test $80/t.

Despite the bullish supply-side factors, some participants cautioned that actual demand remained selective, with a recent dip in utility tender volumes suggesting high prices may start to dampen buying interest.

"The ongoing strength is partly driven by sentiment and short-covering," said a second Fujian-based trader source. "The market still awaits substantial end-user demand release to sustain a massive breakout."

Data showed that the recent wave of cold spells across China post-holiday quickly pushed up coal consumption at power plants, slightly fueling their replenishment demand, though high stocks continued to constrain their appetite.

Coastal power plants, major consumers of imported seaborne coal, recorded a significant growth in coal consumption on January 5, hitting 2.34 million tonnes, a stark increase of 11.7% from the pre-holiday level. It also marked a 11% year-on-year rise, while inventories and coal supply was 1.8% and 7.4% respectively lower compared with the year-ago levels.

Inventory drawdown

Bolstering the seaborne market was the ongoing rally at northern ports, driven by falling portside stocks and renewed buying interest.

Coal stockpiles at major Bohai-rim ports of Qinhuangdao, Caofeidian, Jingtang, and Huanghua dropped to 26.64 million tonnes on January 7, a weekly decline of 6.22% and hitting the lowest level since November 28, 2025. This has effectively erased much of the inventory build-up in December, easing selling pressure among traders.

The recent decline in temperatures, which pushed up power plant consumption, also injected a dose of confidence among portside sellers, even though a large part of China still experienced flat or even higher-than-average temperatures.

Offers for 5,000 Kcal/kg NAR coal have risen to 620-630 yuan/t FOB northern ports with VAT, with asking levels for some premium low-sulfur material even approaching 630 yuan/t. Deals were heard concluded at 615 yuan/t.

Cargoes of low-sulfur 4,500 Kcal/kg NAR coal were offered at about 525-528 yuan/t. One utility bought 4,500 Kcal/kg NAR coal through tender at prices netting back to 520 yuan/t FOB with VAT northern ports.

"Today's inquiries have definitely picked up," a Hebei-based trader source disclosed, adding prices might not have much room to fall in the whole month.

However, while sellers were holding firm on offers, actual transactions remained thin. The high price levels themselves were seen as a brake on widespread procurement.

"Market sentiment is okay, but overall transactions are just average. High prices have suppressed some demand," explained a Zhejiang-based trader source.

Many suppliers remain firm on asking prices, anticipating that Further stock drawdowns will force a return to the market by sidelined buyers, according to the trader.

The consensus points to a market caught in a temporary equilibrium. While supply reduction, both imported and domestic, and high costs prevent any significant price collapse, the absence of sustained demand boosts also caps the upside potential for a major rally in the near term.

Data showed that inland power plants, mainly fed by domestic coal, consumed 4.2 million tonnes of the fuel on January 5, up 7.7% week on week yet still 0.4% marginally lower than the year-ago level.