China’s portside thermal coal prices kept basically stable for the second day from a rally that lasted for more than a week, as participants were uncertain about the direction with both bullish and bearish factors tangling up.
On December 9, the benchmark 5,500 Kcal/kg NAR thermal coal was mainly offered at 1,350-1,400 yuan/t FOB with VAT at northern ports, compared with 1,350-1,380 yuan/t a day ago; offers for 5,000 Kcal/kg NAR thermal coal were around 1,170-1,180 yuan/t, narrowing from 1,170-1,190 yuan/t a day earlier.
Trading activity went in lull as sellers and buyers were unwilling to compromise with each other, waiting for further clarity about the market trend. The pending pricing of leading state-owned mining group for next week’s third-party coal purchases is one of the clues to be watched by both sides.
Sxcoal learned the group hiked the prices by 50 yuan/t from a week ago for its three major brands. This suggests a rise in the cost of its shipments to northern ports next week, a positive sign for sellers.
Many sellers were still bullish about the market, expecting a good demand outlook as economic activity revives following the complete lift of virus control. An Inner Mongolia-based trader refused a bid of 1,150 yuan/t FOB for its 5,000 Kcal/kg NAR.
“Today there are fewer inquiries emerging in the market. Perhaps this bout of purchases triggered by the cold snap is coming to an end,” he said. “But you cannot rule out the possibility that the demand will bounce back in the second half of the month.”
China announced 10 new COVID measures on December 7, a sign that the country will completely shift away from the zero-COVID policy that has been implemented for three years.
The shift is expected to give a fillip to the industrial sector, which has been battered for months by repeated and lengthy lockdowns.
However, it remains to be seen how long the sector will resume to normal as market sources reported many factories in the south have been off work for the Spring Festival holiday, much earlier than a year ago.
At the same time, the lift will facilitate coal transport and boost supplies to the market. Yulin, a key coal hub in Shaanxi province, announced to cancel the lockdown of all 37 areas with high infectious risks, suggesting coal trucks can go in and out of local mines without any restrictions.
With more coal supply from mines, tightness in the spot market, another factor to support traders to hold up their prices, is set to be eased, participants pointed out.
A Fujian-based trader noted Shanxi coal, especially for high-CV grades, is hardly available. Currently, truck-delivered Inner Mongolia 5,000 Kcal/kg NAR coal was offered at 1,150 yuan/t FOB at northern ports, while sellers were unwilling to sell even at a price of 1,160 yuan/t.
A Hebei-based trader offered 4,500 Kcal/kg NAR thermal coal at 980-1,020 yuan/t.
With the gradual recovery of coal-dedicated Daqin railway, which delivers coal from some of the key producing regions to northern ports, spot coal prices are likely to move down in the near term, he added.
On December 8, coal stocks at the three northern ports (Qinhuangdao, Jingtang and Caofeidian) totaled 20.42 million tonnes, down 3.3% from a week ago but up 30.1% from a month ago.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal
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