China's domestic thermal coal market opened this week with further declines. While a few miners raised offers after sharp cuts, overall sentiment across major producing regions stayed cautious on September 14, with most downstream buyers procuring only on a need-to basis.

Of the 117 coal mines surveyed by Sxcoal on September 14, seven mines raised prices by an average of 19.29 yuan/t, while 11 mines lowered prices by 32 yuan/t on average. The remaining 99 kept prices stable.

A small number of thermal coal grades sourced from Shaanxi's Yulin posted rebounds. Local 6,000 Kcal/kg NAR slack coal (S 0.6%) was heard concluded at 880 yuan/t on September 13, up 20 yuan/t from the last auction. The increase followed prior steep declines that revived truck loadings and modestly improved transactions.

Yet, most miners opted to lower prices again on September 14, with reductions ranging 10-20 yuan/t. A major Yulin-based miner set raw slack 4,400 Kcal/kg NAR material (S 2.3%) at 720 yuan/t today, down 20 yuan/t from September 12, citing poor sales and nearly full stockpiles.

The broader market softness primarily lay in weak demand. Non-power sectors, including cement and chemical producers, mostly secured cost-effective high-CV raw materials to cover immediate consumption, but the capped volumes failed to offer robust support. Traders and washing plants largely eased restocking, leading to consistently increased coal inventories at mines.

With summer heat fading, coal consumption at power plants declined seasonally. In southwestern and southern China, frequent rain is expected to keep temperatures slightly below seasonal norms in the coming days, meteorological forecasts showed. Meanwhile, a wide day-night temperature gap will bring notable chill in the mornings and evenings in northern regions despite mostly clear weather over the coming week. The overall weather picture will limit rebound in electricity demand and consequently thermal coal consumption.

Daily coal burns at plants under six major coastal power groups stood at 832,800 tonnes on September 11, 5.19% lower than the year-ago level, Sxcoal data showed. Fuel inventories at these plants edged down but hovered at two-year highs on the same day, further dampening generators' buying appetite for higher-priced spot cargoes when long-term contract coal could meet essential needs.

Several utilities expect prices to go down further and prefer to drive hard bargains. Some Shandong-based power plants have already pressed down buy prices of certain thermal coal grades by 5 yuan/t since September 13.

A leading Chinese miner's price adjustments reinforced the bearish mood. On September 12, the miner kept third-party coal buy prices unchanged but canceled or reduced incentives for large-volume supplies. This move amounted to a disguised price cut of 7-10 yuan/t, further discouraging speculative purchases.

Nevertheless, the downside room seems limited. Strict safety inspections tightly sealed the channel for overproduction. Even with marginal recovery, overall coal supplies across key thermal hubs are expected to experience notable year-on-year declines, offering a firm floor under mine-mouth prices.

Additional support came from the upcoming Mid-Autumn and National Day holidays, as well as the approaching autumn maintenance of Daqin railway in October. End-user restocking may see phased bursts of activity.

On September 14, Sxcoal assessed Datong 5,500 Kcal/kg NAR coal at 853 yuan/t, mine-mouth with VAT, down 2 yuan/t compared with late last week, while Ordos 5,500 Kcal/kg NAR material fell 31 yuan/t to 804 yuan/t. Yulin 5,800 Kcal/kg NAR grade dropped 2 yuan/t to 880 yuan/t.