China's thermal coal market sentiment weakened noticeably at northern transshipment ports on June 3, as growing selling pressure, high port inventories and downstream resistance outweighed support from tightening mine-side supply, pushing the market into a more cautious consolidation phase.

The prevailing offers at Bohai-rim ports remained largely stable, while trading activity subdued as a whole. High-priced cargoes faced growing resistance as most utilities maintained a wait-and-see attitude and showed little intention to make spot purchases.

Several participants noted bearish views emerging after late May rallies, with more sellers showing willingness to take profit.

More cargoes were being offered mid-week compared with previous days. Some low-sulfur 5,000 Kcal/kg NAR cargoes were reportedly sold to a large mining group at about 6 yuan/t discount to the CCI 5000 Index, while fixed-price deals were heard near 775 yuan/t, FOB northern port with VAT, compared to offers heard at 780-790 yuan/t.

Some 5,500 Kcal/kg NAR cargoes were heard offered at 860-870 yuan/t, roughly unchanged compared with a day earlier. A utility was likely to buy some 1%-sulfur same-CV blended coal at 863 yuan/t or so. Offers of 4,500 Kcal/kg NAR coal were heard in a 680-690 yuan/t range, yet a low-sulfur cargo was heard to have changed hands at a lower level of 678 yuan/t.

Some sources said rising inventories at ports remained a major concern. Total coal stocks at key Bohai-rim ports stepped further closer to the high end for the same period over 2022-2025, Sxcoal's data showed. Short rainfalls and fast temperature recovery in northern China is anticipated to increase spontaneous combustion risks for coal stockpile, forcing some sellers to accelerate inventory rotation, which could potentially lead to increased price corrections.

Meanwhile, robust hydropower generation, as most of the country entered the wet season, continued to cloud the coal demand outlook. Sxcoal's data showed that the Three Gorges outflow, a key indicator for China's hydropower generation, stood at 23,600 cu.m/s on June 2, rising 63.9% from a month ago and soaring 96.7% year on year.

Heavy rainfall across southern China from June 3-9 is expected to support hydropower generation and potentially reduce thermal power demand in the short term, further discouraging spot buying activity.

The weakening market mood was reflected in Sxcoal's real-time domestic thermal coal sentiment index, which stood at 0.24 point as of 16:30 on June 3, plunging from a recent high of 0.91 on May 26. The index, which measures participants' short-term outlook for the thermal coal market, ranges from 0 to 1, with lower readings indicating increasingly negative sentiment.

However, participants were largely confident that any downward corrections would likely be short-lived and gradual.

Sources said safety inspections have expanded beyond some privately owned mines to include state-owned operations in parts of Shanxi after entering the annual Work Safety Month. Many mines have adopted stricter production controls, such as reducing the number of operating working faces, suggesting a possibly more normalized and long-term approach to safety management rather than a severe supply disruption.

On the demand side, while some power plants have built inventories through May and into June, extreme weather risks this summer could still prompt additional restocking need. As of June 2, coal consumption at power plants under six major coastal power groups exceeded the year-ago level by 15.4%, while their stocks fell 6.9% year on year.

Additionally, the domestic market is likely to find support from supply strain in the import market and relatively high import costs.

Import market

China's seaborne imported thermal coal market remained relatively firm on June 3, though high prices increasingly dampened buying interest from Chinese end users.

Indonesian 3,800 Kcal/kg NAR coal for prompt delivery was offered at 600-610 yuan/t CFR South China with VAT, while July-delivering cargoes were offered higher ranging 630-640 yuan/t.

"There are still lots of unsold prompt supplies, which weigh on near-term offer prices," said a Zhejiang-based trader source. He anticipated further price decline for June-arrival cargoes as sellers seek to quicken destocking.

FOB offers for July-delivering 3,800 Kcal/kg NAR cargoes were mostly heard firm above $70/t, with freight rate from South Kalimantan to South China hovering at $11.5/t or so.

"No signs have emerged so far for Indonesian officials to revise their RKAB production quota for the second half, meaning forward supply is still unlikely to significantly improve," said a Fujian-based trader source.

High-CV Australian 5,500 Kcal/kg NAR coal was offered above $105/t FOB, with some sources reporting tight availability even at that level, leading Chinese end users to step back. Some Chinese traders placed offers at 980-1,000 yuan/t CFR South China with VAT, exceeding utilities' tender price ceiling, resulting in weak transactions.