Following over a month of declines, thermal coal prices rebounded at northern China ports in the last trading day of the year. However, end users' resistance to pricier cargoes depressed actual transactions.

As of December 31, the CCI index for domestic 5,500 Kcal/kg NAR thermal coal traded at Qinhuangdao port was assessed by Sxcoal at 681 yuan/t FOB with VAT, up 1 yuan/t on the day. The index for 5,000 Kcal/kg and 4,500 Kcal/kg NAR grade were 591 yuan/t and 497 yuan/t, rising 3 yuan/t and 4 yuan/t, respectively.

The prolonged downtrend since November 24, which saw the CCI 5,500 index shed 152 yuan/t and both CCI 5,000 and CCI 4,500 lose 149 yuan/t, rendered domestic low-CV coal more competitively priced compared to imported coal. The growing advantage sparked an uptick in inquiries, supporting portside prices to bottom out.

With spot prices approaching or even falling below term-contract levels, sellers confirmed limited room for further reductions. Traders adopted a firmer stance, driven partly by inquiries to cover essential needs or short positions. The average number of vessels anchored at northern ports increased to 75 over December 25-31, up from 55-69 in mid-December, Sxcoal data showed.

A Zhejiang-based trader noted that recently, premium coal grades were offered above corresponding CCI indexes. Cargoes with inferior quality are quoted at index parity. Sources also confirmed a 1.0%-sulfur 5,000 Kcal/kg NAR cargo was concluded at about 610 yuan/t.

Offers for 4,500 Kcal/kg NAR coal were reported at some 10 yuan/t above the CCI 4500 index, said a source from Inner Mongolia's Ordos, adding it was getting harder to source cargo before holiday.

The firmness was underpinned by accelerated supply contractions by the year-end. Many thermal coal mines in key production areas began maintenance shutdowns after achieving annual targets. A Shanxi-based miner confirmed operations were winding down for the holiday, reducing coal arrivals at ports.

Meanwhile, constrained storage space at Bohai ports kept inbound shipments at medium-to-low levels, boosting the drawdown of portside stockpiles.

On the demand side, a severe cold wave sweeping across China is expected to provide a timely demand boost. The National Meteorological Center forecasts a 6-10 degrees Celsius drop in central, eastern and southern regions over the next three days. This is anticipated to elevate heating needs, potentially stimulating buying interest from power plants seeking to secure fuel for winter peaks.

Daily coal burns at power plants under six major coastal power groups rose 4.4% on the week and 7.0% on the month to 834,900 tonnes on December 30, Sxcoal data showed, and are expected to climb further along with colder weather.

However, power plants were reluctant to accept excessively high prices, capping further upside room, sources in Zhejiang pointed out.

Quotes for 5,000 Kcal/kg NAR coal ranged 600-620 yuan/t, and 5,500 Kcal/kg NAR material was offered at 700-710 yuan/t. Transaction volumes, however, were sparse on the whole.

Both coastal and inland power plants held sufficient coal stockpiles. Even with a seasonal rise in consumption, peak winter demand is not expected to surpass summer peaks. High available days of fuel stocks significantly reduced the urgency for large-scale restocking, keeping most generators in a cautious mode.

Despite a recent decline in port-bound coal shipments and a destocking phase at Bohai-rim ports, mines are expected to begin the new year with strong production in January as they implement new production plans. This is likely to boost mine output and, consequently, deliveries to ports.

Coal stocks at Qinhuangdao, Jingtang, Caofeidian, and Huanghua ports still hovered high at 28.41 million tonnes as of early December 31. The volume was 11.20% higher than the year-ago level, as per Sxcoal, which will take a longer time to deplete and post uncertainties to sustained price rallies.

Participants believe that portside prices are less likely to rise strongly after New Year's Day. "Discounts for rail freight rates in certain regions have largely been offset by mine-mouth price increases," one insider noted.