China's domestic thermal coal market wrapped up the month with a continued trading lull and prices moving sideways. But the underlying supply constraints, firm cost support, and seasonal demand expectations prompted some traders to hold stocks for higher bids in November.

Seeing a pickup of inquiries despite a still cautious buying stance among utilities, sellers largely expected a limited room for prices to decline, maintaining offers broadly unchanged. Adding to the positive tone, traders were increasingly reluctant to sell stocks, fearing challenges in restocking below or even at their selling levels.

Offers of low-sulfur 5,000 Kcal/kg NAR coal were mostly around 685-690 yuan/t FOB northern ports with VAT, though buyers stayed reluctant to pay above 680 yuan/t. Offers for 5,500 Kcal/kg NAR coal were firm at 770-780 yuan/t. Cargoes of 4,500 Kcal/kg NAR coal were heard roughly flat at 590-600 yuan/t.

Persisting losses in shipping coal from mines to northern ports continued to discourage traders from bringing new cargoes to the portside market, sources said, resulting in little improvement in port stock availability.

Sxcoal's estimate on October 30 showed that the all-in costs of Shanxi Datong 5,500 Kcal/kg NAR coal delivered to northern ports remained 37 yuan/t higher than portside prices. The spread, however, narrowed by 15 yuan/t compared with the week-ago level.

Coal stocks at major Bohai-rim ports declined further. Despite the decline being partly due to the discharge of long-term contracted coal, it still encouraged sellers to maintain their offers.

On October 31, coal inventories at Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports dropped at an accelerated rate day on day to 23.17 million tonnes, marking the lowest level since the start of the month and below the year-ago level by 10.54%, Sxcoal's data showed.

Port stock dynamics strongly influence prices; declines often push prices up, while buildups increase the chance of price drops.

A tangible sign of underlying strength appeared alongside regional increases in mine-mouth offers following a short-lived downtrend. "If price increases extend further in production areas, the overall portside offers are likely to bottom out staring next week," said a Shanxi-based trader source.

Some traders have agreed the current deadlock may break as winter stockpiling demand is expected to rise from early to mid-November.

While power plants are currently controlling their purchasing pace, their comparatively low level of inventories mean they cannot delay for long should cold spell intensify.

"Power plants that missed the best window to restock earlier may find it a bit late to build stocks with low-cost cargoes," said a Guangdong-based trader source. "Prices are easy to rise but hard to fall in the near term, considering fragile port supply, high costs, and impending seasonal demand."

Import market fundamentals remain firm

The seaborne import market saw a slowdown in activity, following retreated tendering enthusiasm from major power utilities in China this week. However, bidding prices to recent utility tenders largely stabilized, backed by improved domestic sentiment and firm miner offers.

"Several earlier low-priced offers came from traders liquidating prompt shipments, but you can't buy at too low a price," said a Guangzhou-based importer source.

"The recent dip in power plant coal consumption has allowed utilities to slow their procurement, but with overall inventories not high, an expected further temperature decline in November may spur some purchases," he added.

Some sources also saw support from the supply side in Indonesia as the rainy season coupled with domestic obligations kept constraining supply and fundamentals bullish.

Offers of Indonesian 3,800 Kcal/kg NAR coal for December-delivering Panamax cargoes were heard largely at a $2.5-3/t premium to the index.