- Sellers face pressure to offload cargo amid weak demand
- Coal consumption of power plants remain at seasonal lows
Mysteel Global: China’s thermal coal market is facing growing downward pressure as inventories at northern transshipment ports have ballooned, following gale-led marine traffic controls that sharply curbed coal outbound shipments.
Coal stockpiles at the eight key northern ports tracked by Mysteel surged to a record 30.02 million tonnes (mnt) as of 15 April, up 0.3% from the previous day and 6.2% w-o-w, reversing a month-long declining trend.
Over 11-14 April, strong gales triggered port-level traffic restrictions, slashing coal outflows. On 13 April, coal throughput from the eight ports plunged to just 390,000 tonnes (t) from the 1.1-1.4 mnt seen recently, Mysteel’s data showed. While outflows rebounded to 1.16 mnt on 15 April, it would take time to clear the backlog.
“The traffic control has essentially wiped out all previous destocking efforts,” said a trader based in North China. In the past month, coal stocks at the eight ports had declined by 1 mnt, according to Mysteel’s data.
With coal stockpiles mounting, sellers are now under greater pressure to offload cargo by cutting offers, as railway authorities will slow their approvals of new rail wagons for traders failing to reduce their portside coal stocks and free up capacity for new arrivals, sources disclosed.
Yesterday, trading activity in China’s portside thermal coal market remained largely inert. Demand stayed muted as most power utility companies stayed on the sidelines, while only some industrial end-users made some purchases to cover urgent needs.
Offers at northern China ports were mostly stable, with 5,500 kcal/kg NAR coal quoted at RMB 675-685/t, 5,000 kcal/kg NAR at RMB 590-605/t, and 4,500 kcal/kg NAR at RMB 520-535/t, all FOB with VAT.
“Coal consumption of coastal power plants is still at seasonal lows, broadly similar to the same period last year, with many utilities putting their unit in maintenance stoppages by turns,” said a South China-based trader.
Still, he noted that utilities’ coal stockpiles have not risen significantly, as supply volumes have also pulled back, hinting at potential demand recovery in the run-up to summer.
At main production areas, signs of price weakness were also emerging, with thermal coal tags dipping this week, as recent gains dampened buying interest, according to sources.
Among the 143 thermal coal mines surveyed by Mysteel, 22 reduced prices by an average of RMB 10/t on 15 April, while only seven mines raised prices by around RMB 16/t. The rest maintained firm prices.
In the seaborne market, offers for Indonesian 3,800 kcal/kg NAR coal for May loading remained at $50/t FOB Kalimantan, unchanged despite a softening Chinese market.
Chinese traders have further reduced their bids for domestic utilities’ tenders seeking Indonesian 3,800 kcal/kg NAR coal, to prices that net back to around $48.5-49/t FOB, barely profitable or worse. “They are bidding at loss-making levels just to secure sales,” said another trader in South China. “This will inevitably impact the performance of long-term contracts with Indonesian miners.”
China’s coal imports fell 6.9% y-o-y in March, according to China’s customs data. With domestic demand still sluggish, market watchers expect further declines in coal imports in April and May.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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