China's domestic thermal coal market at northern transfer ports opened the week with heightened caution among both buyers and sellers, suggesting prices may stabilize after last week's rally.

Spot activities have started to show signs of moderation late last week amid buyer reluctance in the traditional off-season and sell-side price resilience backed by high costs. While selling pressure is reportedly mounting among traders attempting to further raise prices this week, a slight increase in profit-taking approaches casts a doubt over the sustainability of the price increases.

Offers stayed broadly stable on May 11 with only minor adjustments rather than sustained gains; transactions were subdued amid a bid-ask spread.

One trader source reported muted buying interest for 0.6%-sulfur 5,000 Kcal/kg NAR coal at 760 yuan/t, FOB northern port with VAT, after a deal reached at about748 yuan/t a week ago. Some cargoes with higher CV were heard offered around the CCI 5000 index, hovering in a 740-750 yuan/t range, yet transactions were muted.

Low-sulfur Shaanxi 5,500 Kcal/kg NAR coal was heard offered at 840-845 yuan/t, with scarce low-priced cargo available due to high costs. Some sellers saw limited momentum for further price hikes, noting that buyers largely shunned purchases in that range.

"Spot coal is increasingly difficult to sell at higher levels," a Shanxi-based trader source confirmed. "The requirement for inventory rotation at certain ports is still likely to force a few sellers to accept lower bids, potentially triggering mild downward corrections."

On May 11, the CCI index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao stood at 835 yuan/t FOB, unchanged from late last week. The index assessing 5,000 Kcal/kg NAR coal edged up by 2 yuan/t to 748 yuan/t, while 4,500 Kcal/kg NAR coal remained flat at 651 yuan/t.

Coal stocks at key Bohai-rim ports continued to accumulate post-May Day holiday, partly driven by pent-up delivery on the Daqin railway after concluding maintenance on April 27. As of early May 11, the total stocks at Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports stood at 27.38 million tonnes, rising by nearly 5% compared with late April, Sxcoal's data showed.

Additionally, procurement from power plants generally focused on long-term contracts rather than spot purchases, traders confirmed.

However, any price adjustments are likely to be modest, with some buyers still waiting for a correction before building positions. Besides, high all-in delivered costs from northern mining areas to northern ports, along with relatively high import prices and a sustained positive demand outlook this summer, would all provide floor support.

Some trader sources also reported rail transport constraints. Certain rail lines are prioritizing long-term contract delivery while limiting or even temporarily stopping spot coal transportation. This could cap the spot availability at ports and offer bargaining power to spot coal sellers.

Overall, the portside spot market is showing signs of stabilizing after speculation-driven volatility, with short-term price fluctuations expected to remain narrow.

Import market stays firm

Imported coal prices in southern China remained firm, backed by still high FOB offers and freight costs.

Indonesian 3,800 Kcal/kg NAR coal was offered at $67-68/t FOB for Panamax shipment, with some June-delivering cargoes at about $6.5/t premium to the local benchmark index. A deal for Supramax same-CV coal was heard at $64.5/t.

Freight rate for Panamax coal from South Kalimantan to South China hovered at $11.5/t or so, while the rate for Supramax vessels at $12-13/t.

While Chinese utilities continued resisting high import prices, some importers grew optimistic, anticipating a demand release in the near term as the gap with domestic resources closed.

Sxcoal's estimate on May 9 showed that Indonesian 3,800 Kcal/kg NAR coal shifted to a slight advantage of 0.25 yuan/t against domestic 4,500 Kcal/kg NAR coal on a CV-adjusted and delivered-to-South China basis, compared with a disadvantage that lasted for over three months.

Offers of high-CV Australian 5,500 Kcal/kg NAR coal rose to $102/t FOB, with Capesize and Panamax freight hovering $20-21/t. Transactions in South China were heard at 920 yuan/t or so.

Market expectations have partially shifted from potential price corrections, driven by anticipated lower-priced cargo releases, to relatively firm prices, supported by ongoing utility tenders with awards slightly above expectations.