China: Thermal coal market remains weak on subdued buying

• Muted power usage, US-China tensions dampen sentiment
• Coal inventories at 8 northern China ports hit record high

Mysteel Global: China’s thermal coal market at both ports and production areas continued to lose momentum on 8 May, amid subdued buying activity from end-users and speculative traders, Mysteel Global noted.

Spot trading at China’s northern ports – the country’s main distribution hub for thermal coal – remained sluggish, with most coal trading firms showing little interest in procuring new cargoes, sources said.

Market sentiment remained pessimistic, as May typically ushers in a seasonal lull for coal consumption. The lack of significant air-conditioning demand kept electricity use – and thus coal demand – muted.

Further dampening sentiment, the ongoing tariff tug-of-war between the US and China fuelled concerns over the potential impact on Chinese industrial production. This cast a shadow over expectations for industrial power consumption and, by extension, coal demand, market participants noted.

As a result, most coal trading companies opted to stay on the sidelines, shunning new purchases to mitigate risk, sources added. Weak sales, in turn, prompted portside sellers to cut their offers further.

On Thursday, Mysteel’s assessment of the benchmark 5,500 kcal/kg NAR coal registered another RMB 5/t ($0.7/t) dip d-o-d to RMB 645/t, while prices of 5,000 kcal/kg and 4,500 kcal/kg NAR grades reached RMB 565/t and RMB 500/t, both lower by RMB 5/t, on a FOB northern ports basis with VAT.

Notably, coal inventories at the eight major northern ports under Mysteel’s tracking stood at a record high of 30.87 million tonnes (mnt) as of Thursday, up 0.9% d-o-d and surging 42.8% y-o-y. The ballooning stockpiles dealt a further blow to market confidence, sources said.

In China’s key coal-producing regions, prices also continued to decline yesterday. The downtrend was exacerbated by new cuts from China Energy Investment Corporation – one of the country’s top coal producers – which reduced its procurement prices of third-party coal by RMB 7-10/t across 5,500 kcal/kg, 5,000 kcal/kg, and 4,500 kcal/kg NAR grades, effective from Wednesday, sources disclosed.

Of the 149 Chinese thermal coal mines under Mysteel’s monitoring nationwide, 17 reduced their prices by an average of RMB 15/t, seven raised theirs by an average of RMB 12/t, while the remaining mines kept prices stable yesterday.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.