A part of Chinese utilities showed interest in cost-effective thermal coal cargoes delivered via trucks to northern ports this week, an option that could minimize cost before demand recovers but helps little to ease the market lull.
The move came alongside the lingering tightness of rail wagons after a few rail lines were interrupted by the COVID outbreaks among crews.
The lowest offer for truck-loaded coal was 1,520 yuan/t, basis 5,500 Kcal/kg NAR, compared with 1,550 yuan/t FOB of rail delivery, according to market sources.
Yet not many end users were willing to take such cargoes, impacted by the prevailing bearishness toward the near-term market and strong sidelined sentiment, Sxcoal learned.
Before any signs of increasing winter restocking need, coal delivery of Daqin and Dazhun railways, two major coal rail lines connecting main production hubs with northern ports, has made a steady recovery to normal levels.
Shipments of Daqin line increased to 581,900 tonnes on November 7, compared with 517,400 tonnes late last week and 450,200 tonnes in end-October, after the epidemic situation escalated at one of its station in mid-October.
Coal inventory at Qinhuangdao port also rebounded from a one-year-plus low of 3.95 million tonnes on November 1 to 4.31 million tonnes, which was still 10.2% lower on the month, Sxcoal data showed.
Offers mainly focused on 1,530-1,550 yuan/t FOB northern ports for 5,500 Kcal/kg NAR coal on November 8, dipping from 1,570-1,580 yuan/t late last week, according to sources.
Power utilities seemed to make more inquiries today, but deals finalized were still sparse, a Hebei-based trading source said, speculating this may be a move to test the market.
People are all waiting and watching changes of the market, both those with or without actual demand, a Shanxi-based trader said. “In face of possible downside risk as no clear strength gained so far, everyone wanted to see the prices hit the bottom, being it deep or not,” he noted.
The source expected the bottom level could be 1,500 yuan/t for benchmark 5,500 Kcal/kg NAR coal, which means there’s still 50 yuan/t downside space.
Some participants foresaw no deep falls of the market in the near term, as the supply and transport issues still remained and may not recover to normalcy quickly.
It’s still hard to get rail wagons bound to Caofeidian port, where frequent congestion was reported as many shifted to trucking delivery.
Coal production at some northern mining cities was still constrained by on-and-off epidemic flare-ups and the resultant traffic controls, an interruption that may not disappear soon.
Some participants pin hopes on possible turnaround in mid- or end-November, when power utilities and non-power firms may step up replenishments alongside cooling weather and the end of off-peak production in cement sector.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply