China’s mine-mouth thermal coal prices continued to increase on July 7, with widespread rises of 20-30 yuan/t, since the spot cargo availability was dented by strict checks on fulfillment of long-term contracts in Inner Mongolia and government efforts to ensure delivery to utilities.
On July 6, the country’s top economic planner restressed on the fulfillment of long-term contracts, and asked coal miners to 100% implement the contract, rather than previous 80% and 90% for the monthly and quarterly contracts.
Sxcoal’s daily survey data showed since most mines focused on term contracted coal shipment, sales to spot buyers were limited. This also promoted 12 out of the 20 mines surveyed to raise coal prices by 10-30 yuan/t on July 7, mostly Yulin and Shenmu of Shaanxi.
One Yulin-based miner reported his slack 6,000 Kcal/kg NAR coal with 0.8% sulfur was offered at 1,180 yuan/t mine-mouth basis with VAT, up 20 yuan/t rise. The miner added that he signed 1.5 million tonnes of long-term contracts with Chongqing in southwestern China and suspended online auctions to spot buyers.
Mine sources contacted by Sxcoal said a number of miners recently were changing longwall faces, which, together with intensified checks on long-term contract fulfillment, tightened regional coal supplies and pushed up coal prices.
On July 6, Sxcoal assessed 6,200 Kcal/kg NAR lump coal with 0.5% sulfur in Yulin at 1,300 yuan/t, mine-mouth with VAT, while the 5,500 Kcal/kg NAR thermal coal in Ordos of Inner Mongolia was assessed at 787 yuan/t.
Earlier this month, sales of opencast mine in Ordos was hampered by continued rainfall. Sales have increased recently with recovered demand. Local miners focused on honoring term contracts, with basically all slack coal supplied to contracted buyers, and lump coal left to spot buyers.
“We will have 10-20% production for spot buyers, and this volume may decline to ensure shipment to power utilities. But we also heard that some mines shipped all of their output to contract clients,” said one miner in Ordos.
But there were signs indicated emerging downside as power utilities’ intensive restocking before the summer peak is about to come to an end.
“We haven’t received any inquiries today and the market is seemingly starting another downturn,” said one Shanxi-based miner on July 7. He offered 5,600 Kcal/kg NAR raw coal with 0.4% sulfur at 1,200 yuan/t, mine-mouth with VAT.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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