China’s portside thermal coal market fell at a faster pace as concerns eased over potential supply tightness in the winter heating season, although rail inflows via the leading railway haven’t yet recovered to normal.
On November 15, the benchmark 5,500 Kcal/kg NAR thermal coal was offered at 1,480-1,500 yuan/t FOB with VAT at northern ports, down from 1,500-1,520 yuan/t late last week, while 5,000 Kcal/kg NAR coal was mainly offered at 1,260-1,280 yuan/t, compared with 1,300-1,310 yuan/t on November 11.
A few traders stubbornly pegged their prices above 1,500 yuan/t for some high-CV cargoes, but this may not last long as “buyers simply ignore this pointless behavior”, a Hebei-based trader said.
The decline came in sync with a decline at mines, following a state-owned mining group on November 11 cut its buying prices from other mines by 32 yuan/t for cargoes delivery over November 11-18.
Major coal-producing Shanxi and Inner Mongolia logged substantial price declines, averaging 30-50 yuan/t in the past two days. Some mines even cut prices by up to 120 yuan/t in response to mounting stockpile pressure.
Both miners and portside traders expected a deeper decline through December as demand has been persistently weak due to warmer temperature.
China’s National Meteorological Administration said the south hasn’t yet entered winter meteorologically. Places incl. Guangxi and parts of Guangdong are still in the summer, with the daytime temperatures still above 30 degrees Celsius.
Mild weather alleviated concerns of supply tightness in the winter days. Coupled with an earlier arrival of the 2023 Chinese Lunar New Year, which falls on January 22 compared with January 31 last year, utilities are not eager for stock building in the spot market as contract supply is enough to maintain stockpiles in the run up to the peak period.
In a bigger context, global coal market has already fallen for weeks. China’s decline seemed a little lagging behind.
Transport via Daqin, the country’s leading coal dedicated railway from northern mines to ports, hasn’t yet recovered to normal shipments. As of November 14, Daqin’s daily shipments hit 764,400 tonnes, still far from its normal 1.3 million tonnes.
But the impact on coal stockpiles at northern ports is narrowing as trucks are allowed to fill in the gap. As of November 14, coal stocks at Qinhuangdao port stood at 4.86 million tonnes, up from 4.31 million tonnes a week ago and 3.95 million tonnes on November 1.
Overall, with recovering supply and waning demand, the portside thermal market is poised to go down further.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply