Imported Indonesian thermal coal market in China saw brisk inquiry activities, with low-CV cargoes drawing stronger buying interest as traders sought to cover short positions and utilities kept floating tenders. Indonesian miners' firm pricing stance ahead of the September 21-23 coal industry conference and rainfall also supported prices.

Offers of the most-popular 3,800 Kcal/kg NAR cargoes were heard at $45-46/t FOB on September 16, with trades heard concluded at $45.5/t over the weekend and sources forecasting tradable levels further approaching $46/t this week. Some October-loading Supramax cargoes of the same-CV coal were heard offered at $43.5/t FOB.

"Inquiries are active as Indonesian low-CV grades remain cost-effective, mostly for filling short positions before the National Day and Mid-Autumn Festival holidays," said a Fujian-based trader source. However, he added that deals above $46/t remained scarce due to strong buyer resistance to further price increases.

Sxcoal's calculation showed that Indonesian 3,800 Kcal/kg NAR coal was about 29.5 yuan/t cheaper than domestic 4,500 Kcal/kg NAR coal converting to the same calorific value and on a delivered to South China basis, shrinking by 5.8 yuan/t from a week ago and 38.9 yuan/t compared with the month-ago level.

Despite this, a further significant contraction seemed unlikely, as domestic prices began to rise at northern transfer ports and production areas. Some participants believed this trend might continue to attract buying interest from major power plants.

China Huaneng Group, one of the major state-owned power generators, is seeking to procure 16 Panamax cargoes totaling 1.091 million tonnes of seaborne thermal coal (3,000-4,700 Kcal/kg NAR) with October delivery through a tender that is due to close at 9:00 Beijing time on September 17. Six cargoes are required to be only from Indonesia, according to a company announcement.

Additionally, one southern China-based power utility is sourcing some October-November-delivering Panamax cargoes of thermal coal from Indonesia (mainly ultra-low, low, mid-CV). The utility bought a Panamax cargo of October-delivery 3,800 Kcal/kg NAR coal at $44.8/t FOB from an earlier tender closed last week.

Offers for Indonesian mid-CV 4,400 Kcal/kg NAR coal were heard at $57.5/t FOB at the start of the week, following one deal by a utility at $56/t.

Weather disruptions in Indonesia also lent support, with rains reported in Kalimantan constraining output and slowing shipments. However, the impact is expected to ease in the near term, with the Meteorology, Climatology, and Geophysical Agency forecasting a narrowed coverage of rainfall in the coal heartland from September 16-22.

Some trader sources cautioned that demand may slow once near-term shortfalls are covered. "The short-covering phase is nearly over, so the upside is likely limited," said a Guangzhou-based importer source.

Meanwhile, lukewarm consumption at power plants may not support sustained rallies. Data showed that the average coal burns at power plants run by six major Chinese coastal power groups on September 15 dipped 0.6% week on week and 3.2% on the month. Their stocks were marginally down by 0.6-0.7% from the same periods.

Demand faced downside pressure. China's National Meteorological Center continued to issue storm and gale warnings on September 16, forecasting heavy rainfall across some provinces in central, eastern, northern, and southwestern China through September 22. The prolonged rain may suppress regional coal burn and benefit hydropower generation.

Sxcoal's data showed on September 15, water outflows of Three Gorges dam, a major indicator of teh country's hydropower output, were registered at 22,300 cu.m/s, surging by over 64% from the month-ago level and skyrocketing 190% year on year.

Lingering high temperatures in some southern areas of China are expected to ease after September 18, leaving power plants cautious in replenishing.

"Domestic and imported coal prices are moving upward in tandem," said a Beijing-based trader source. "With northern port inventories fluctuating at a lower level and import coal prices still competitive, the seaborne low-CV market is likely to remain supported in the near term. The pace of gains, however, will depend on whether utilities extend procurement beyond October cargoes."

Australian coal remained relatively quiet, with few fresh trades reported. High-CV 5,500 Kcal/kg NAR coal cargoes were offered at 690-700 yuan/t CFR with VAT south China, with an upward tendency alongside rising domestic high-CV offers.