Thermal coal capacity utilization at major Chinese production bases rebounded over the past week, ending a six-week decline, though overall rates remained relatively low amid subdued buying interest and slow mine sales.

Data from Sxcoal showed capacity utilization at 160 thermal coal mines in the three key producing provinces of Shanxi, Shaanxi and Inner Mongolia averaged 86.5% during the week of July 2-8, up 4.4 percentage points from the week prior.

In Shanxi, utilization stood at 75.9%, up 2.3 percentage points week on week, while Shaanxi and Inner Mongolia recorded 90.6% and 90.1%, up 3.7 and 6.1 percentage points respectively.

The rebound was driven by a resumption of production at mines that had completed monthly targets or undergone maintenance earlier. However, supply gains in the main producing regions remained capped, as some mines in Shanxi stayed shut due to ongoing safety and environmental inspections.

Total output from the surveyed mines reached 15.76 million tonnes during the week, up 5.3% from a week earlier, also marking the first increase in six weeks.

Shanxi mines produced 3.64 million tonnes of thermal coal, up 3.2% week on week, while Shaanxi and Inner Mongolia output rose 4.2% and 7.2% to 4.96 million and 7.17 million tonnes respectively.

Despite the recovery in production, effective output remained limited under sustained high-pressure safety inspections, keeping the supply side relatively tight.

Total inventory at the surveyed mines stood at 3.97 million tonnes as of July 8, up 2.5% from the prior week, though still at low levels.

Shanxi mine thermal coal inventory was 1.02 million tonnes, down 0.2% from a week earlier, while Shaanxi stockpiles edged up 0.2% to 0.9 million tonnes. Inner Mongolia inventory rose 4.9% to 2.04 million tonnes.

Downstream buyers adopted a wait-and-see approach amid the market downturn, with limited end-user procurement and cautious trader demand, leading to slow mine sales and some inventory pressure at a few mines. However, most mines reported good sales after price cuts, keeping overall stockpiles low.