China's import low-CV thermal coal market extended gains backed by active short-covering demand. Some trader bids to major utility tenders for 3,800 Kcal/kg NAR cargoes climbed above 430 yuan/t CFR South China, returning to levels seen during the summer peak period.

Offers for October-delivering Indonesian 3,800 Kcal/kg NAR coal strengthened further to exceed $46/t FOB for Panamax vessels, with increasing sellers unwilling to release cargoes below the level. However, some counteroffers from Chinese buyers were heard at slightly over $45/t.

While continued releases of tenders from Chinese utilities buoyed sentiment, their actual procurements have yet to pick up strongly, making traders' purchases to cover previous short positions the primary driver of the current rally.

Sources said Chinese utilities including Huaneng and Yudean have received higher bidding prices, resulting in some tender failures due to a lack of low-price offers.

Tight availability of supply from Indonesian miners also helped shore up offering prices. "It's not easy to secure cargoes from big miners, even at $46/t FOB," said one Fujian-based trader source.

Rainfall in parts of Kalimantan has eased, but some miners have not resumed normal production and logistics. In South Sumatra, rain continues to affect production, though conditions are expected to improve after September 19.

Freight rates for Kalimantan to South China slightly eased week on week to around $7.5/t, offering a slight relief to the costs of importers.

Some participants believed that prices would not fall at least till the end of the National Day holiday, partly fueled by a renewed upward momentum in China's domestic market amid the recent overproduction inspections in the leading coal production hub of Inner Mongolia.

Indonesian mid-CV 4,700 Kcal/kg NAR coal was heard offered at $62/t FOB, while Australian cargoes were reported changing hands at around $84.7/t CFR China, according to trade sources.

"As domestic prices rebound fast, Indonesian 3,800 Kcal/kg NAR coal has gained competitiveness, which may continue to attract buying appetite from some coastal power utilities," said a Guangdong-based trader source.

The CCI index for domestic 4,500 Kcal/kg NAR coal climbed by 11 yuan/t during the first three days this week, exceeding the increase of the index for CFR prices of imported Indonesian 3,800 Kcal/kg NAR coal at around 8 yuan/t.

Sxcoal's calculation on September 17 showed that the popular seaborne grade was 36 yuan/t cheaper than domestic equivalents after converting to the same calorific value and on a delivered to southern China basis, expanding by 6.33 yuan/t week on week though still contracting 29 yuan/t from the month-ago level.

Participants also saw potential support from falling inventories at southern ports of China. Inventories at Guangzhou port fell to 2.46 million tonnes on September 16, below the same period in both 2024 and 2023, Sxcoal data showed.

"I think right now it's sentiment more than fundamentals," a second trader source in Guangzhou warned. "A post-holiday correction remains possible due to continued seasonal weakness and strong renewable energy production in southern China," he added.

Data showed on September 15, coal consumption at power plants of coastal provinces in China averaged 2.24 million tonnes, down 5.4% week on week and 6.7% on the month. It also fell short of the year-ago level by 2.7%. The spreading rainfall brought temperatures down significantly in northern China and heat intensity in southern China also reduced, weighing further on residential use for electricity.

Meanwhile, robust hydropower generation could squeeze coal-fired power demand and pressure prices once this wave of replenishment ends, participants pointed out.

Australian thermal coal cargoes remained in tight supply due to congestion at export ports, sources said. Because of the same reason, countries like South Korea are increasing imports of high-CV coal from alternative countries of Russia and Indonesia.

Some offers of Australian 5,500 Kcal/kg NAR coal were heard at around 710 yuan/t CFR China with VAT. A trade was reportedly done at $84.7/t CFR.