China's seaborne import thermal coal market ended the week with another rapid price increase, with Indonesian and Australian prices rising sharply as tightening spot availability, higher restocking costs and a rally in China's domestic market encouraged sellers to chase higher levels despite an approaching seasonal slowdown in demand.

Indonesian low-CV coal remained at the center of the market's upward move. Offers for Indonesian 3,800 Kcal/kg NAR coal elevated further to $72-73/t FOB, with October-delivering cargoes reportedly attracting more buying interest recently.

"Interest in Indonesian coal is rising, and even September-loading 3,800 Kcal/kg NAR coal at $72.5/t FOB is attracting buyers," one southeastern China-based importer source said, expressing positive expectations for the market over the coming weeks.

Another importer source from South China said Indonesian spot resources remained relatively scarce, especially for low-CV coal, while the recent surge in China's domestic prices had prompted more utilities to place import tenders.

Concerns over transportation constraints in Indonesia, with low water levels affecting some coal movement, and inactive approvals for RKAB mining quotas for low-CV coal together have added to supply-side uncertainty, Sxcoal learned.

"If the reported disruptions prove more severe than expected, buyers could face further competition for October-delivering cargoes," the southern China-based source added.

Australian coal has also strengthened. Australian 5,500 Kcal/kg NAR coal was offered at $101-102/t FOB, with deals reported near those levels. The delivered cost of Australian 5,500 Kcal/kg NAR coal into southern China was estimated at 930-940 yuan/t, leaving some competitive room against domestic prices of the equivalent that have risen rapidly in recent days.

Bidding prices to imported coal tenders have consequently moved higher. Bids for Indonesian 3,800 Kcal/kg NAR coal were heard at 609-638 yuan/t, CFR South China with VAT, on August 27, with the lowest price netting back to roughly $70.5/t FOB on a Panamax basis. Australian 5,500 Kcal/kg NAR coal bids recently hovered around 923-946 yuan/t CFR South China, with the lowest level translating to over $100/t FOB on a Capesize basis.

On August 28, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stood at $70.5/t FOB and $82/t CFR South China port, rising by $0.5/t and $1/t respectively day on day. The index for Australian 5,500 Kcal/kg NAR coal gained $1/t to $122/t CFR.

Domestic rally drives market momentum

Besides supply constraints from mines in Indonesia, the recent surge in China's domestic coal prices has also been an important catalyst for the seaborne market.

On August 28, Sxcoal's CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port rose 6 yuan/t day on day to 880 yuan/t FOB with VAT, the highest since June 8, 2024. The index for 5,000 Kcal/kg NAR coal also increased by 6 yuan/t to 789 yuan/t, while the index for 4,500 Kcal/kg NAR coal climbed by the same amount to 706 yuan/t, both reaching their highest levels in nearly 30 months.

Elevated mine-mouth prices due to safety check-induced slow production recovery, recent rain-related disruptions to some opencast mine output and transportation, and declining port inventories have combined to strengthen traders' willingness to reserve cargoes and raise prices at key northern transshipment ports.

Offers for 5,000 Kcal/kg NAR coal climbed further to 810-820 yuan/t, FOB northern ports with VAT, with a deal reportedly canceled at 820 yuan/t as the seller turned reluctant to sell at the level. Cargoes of 5,500 Kcal/kg NAR coal were heard at 900-910 yuan/t, while utilities' buy level through tenders was equivalent to roughly 895 yuan/t.

Low-CV coal was particularly tight, with 4,500 Kcal/kg NAR coal offered around 720-730 yuan/t, and increasing sellers suspended offers, waiting for higher levels.

Many participants expect persistent demand gaps in the weeks ahead, which they believe would drive the next rally. A few traders are already looking towards the psychological 1,000 yuan/t level for 5,500 Kcal/kg NAR coal.

Yet not all participants share that view. Some cautioned that the current movement has been overwhelmingly a supply phenomenon and that calling for 1,000 yuan/t remains premature.

Power plant participants said that the demand picture was relatively moderate. Residential load in some regions remains at moderately high levels thanks to lingering heat, but rainfall has capped any meaningful recovery in thermal unit utilization, while robust wind and hydro output continues to crowd thermal plants off the dispatch ladder.

Coal stockpiles at power plants cover more days of consumption than a year ago, and the resulting aversion to expensive coal has, to some extent, restrained the upward space.