Sentiment in China's northern port thermal coal market retreated on August 19, pressured by lukewarm downstream demand, sluggish port outflows, and the resulting accumulation of stocks. However, firm mine-side offers and high shipping costs prevented spot prices from seeing a noticeable decline.

Trading activity at northern ports has weakened noticeably in recent days, with buyers showing limited interest in replenishment and some traders looking to secure profits amid growing uncertainty over the market outlook.

Sxcoal's data showed that the average daily coal outflows from Qinhuangdao, Caofeidian and Jingtang ports in northern China fell to around 864,000 tonnes so far this week, down sharply by 24.9% from 1.15 million tonnes in the previous week.

Meanwhile, average daily inflows increased by 9.3% to around 1.18 million tonnes from 1.08 million tonnes a week earlier, indicating weaker shipment momentum and renewed pressure on port inventories.

The combined coal inventories at the three major ports reached 25.10 million tonnes on August 19, marking the fifth consecutive day of accumulation. The continued stock build-up has gradually weakened sentiment and made buyers more cautious.

One eastern China-based trader source said a cargo of low-sulfur 5,000 Kcal/kg NAR coal was recently traded at 831 yuan/t, delivered to a power plant along the Yangtze River, equivalent to approximately 760 yuan/t FOB northern ports with VAT. The transaction was below current offers of around 770 yuan/t at major northern ports.

"Sellers remain willing to offload cargoes, due to persistent weak demand," the trader pointed out.

At the same time, expectations for a gradual recovery in mine output later this month have increased. Although it may take time for additional supply to filter through to ports, the prospect of improved availability has encouraged some traders to lock in margins, limiting further price gains.

However, most sellers remained reluctant to cut prices. Supply from major producing regions remains constrained, keeping mine-mouth prices firm and maintaining high delivered costs for port traders.

One eastern China-based trader reported a delivered cost of Shanxi 5,000 Kcal/kg NAR coal to northern ports at around 810 yuan/t, resulting in a loss of roughly 40 yuan/t compared with current selling levels.

A trader source from Inner Mongolia said 0.6%-sulfur 4,500 Kcal/kg NAR coal was offered at about 690 yuan/t, broadly unchanged from previous levels.

"Traders unwilling to lower prices are finding it difficult to complete sales; they are also hesitant to replenish from mining areas," he added.

Some participants noted that the current market imbalance between production areas and northern ports has made trading increasingly challenging, with tight supply at mines contrasting with weak demand at ports.

"The divergence between mining areas and ports has made it difficult for traders to participate actively, while buyers remain on the sidelines," a northern China-based trader said.

Demand was also proven to be one of the main factors limiting market recovery. From August 1-18, daily coal consumption at inland power plants declined 4.5% year on year and 5.3% compared with the same period in 2024, while consumption at coastal power plants fell 1.3% year on year and 4.6% from 2024 levels.

Some participants expect coal demand growth to slow as the summer peak consumption season gradually comes to an end, reducing support from the power sector.

For now, the market is likely to remain caught between firm costs and weak demand. Limited supply and high costs are preventing a noticeable price correction, while rising inventories and lackluster consumption are making it difficult for prices to move higher.

On August 19, the CCI index for domestic 5,500 Kcal/kg NAR coal at Qinhuangdao port was 860 yuan/t, FOB with VAT, unchanged day on day. The index for 5,000 Kcal/kg NAR coal fell by 1 yuan/t to 770 yuan/t and 4,500 Kcal/kg NAR coal stayed flat at 686 yuan/t.