- Supply tightness grows as Yulin mine suspensions and safety inspections bolster thermal coal prices
- Seasonal demand strengthens with record utility coal burn and declining inventories supporting the market
China’s spot thermal coal prices held steady for a sixth consecutive session on July 29, but market sentiment jumped amid renewed supply concerns after four coal mines in Yulin, the largest producing hub in Northwest China’s Shaanxi province, were ordered to suspend operations the same day. This could provide a fresh catalyst for a market that has already begun to show signs of strengthening.
On Wednesday, Mysteel assessed 5,500 kcal/kg NAR thermal coal at northern ports at Yuan 825/tonne ($121.7/t) FOB with VAT, unchanged for a sixth straight day. The 5,000 kcal/kg NAR grade held at Yuan 735/t and the 4,500 kcal/kg NAR grade at Yuan 642/t, both flat from a day ago.
Yulin’s energy bureau on Wednesday ordered suspensions of four thermal coal mines named Yushuwan, Taifaxiang, Honghua and Jinsheng, whose combined production capacity totalled 22.5 million tonnes/year, citing major safety hazards. According to Mysteel’s latest survey, Yushuwan mine is still producing normally but plans to rectify on July 30, while Taifaxiang remains under inspection with its status pending. Jinsheng had stopped production for a one-month rectification period, and Honghua had suspended with no restart date set.
Safety inspections have remained stringent across major coal-producing regions since a fatal coal mine accident in neighboring Shanxi province in late May, with a series of smaller mining accidents prompting authorities to maintain a high level of scrutiny. Two workers were killed in a coal mine accident on July 25 in Xianyang city, Shaanxi province, according to the provincial safety watchdog.
Ongoing safety inspections have kept regional coal supply tight, providing support to mine-mouth prices that have been under downward pressure from weak demand.
Mysteel’s daily survey of the 117 thermal coal mines across China’s major producing regions showed that 7 mines raised prices by an average of Yuan 14/t on Wednesday, while none cut prices. That compared with 3 mines lowering prices by an average of Yuan 8/t on Tuesday and 10 mines cutting prices by an average of Yuan 10/t on Monday.
At northern ports, the supply-side tightening narrative was already gaining traction. The eight Bohai Rim ports monitored by Mysteel saw inventories fall further on Wednesday, down by 0.5% on day to 27.24 million tonnes, with 1.19 million tonnes flowing in outweighed by 1.34 million flowing out, aligning with the recent trend that outflows have picked up pace since late July.
Traders who had been sitting on the sidelines grew more reluctant to cut offers, worried that a tightening upstream supply would make replacement more difficult. A North China-based trader noted that replacing sold stocks was proving increasingly difficult given the slow pace of upstream price adjustments amid supply tightness, even as downstream buying remained far from enthusiastic.
Helping to underpin the more constructive sentiment were utility readings that continued to improve. Daily coal burn at the six major coastal power groups reached 934,000 tonnes on July 28, up 6,300 tonnes from a day earlier and the highest since at least 2022. Inventory cover eased further to 15.4 days from 15.6 days on Tuesday. The burn data – now above 930,000 tonnes for two consecutive days – showed the seasonal demand recovery is in full swing.
On the seaborne thermal coal front, Indonesian 3,800 kcal/kg NAR coal was heard at $63.5/t FOB Kalimantan in actual transactions, with offers at $64-65/t FOB, almost unchanged on day. The landed costs of imported coal remained elevated, supported by high freight rates, helping support domestic thermal coal prices at northern ports, sources said.
This article is published as part of a content sharing agreement between Mysteel Global and BigMint
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