China’s portside thermal coal prices continued falling on December 19 as demand showed no signs of recovering against the backdrop of Omicron-slowed economy.
On December 19, the benchmark 5,500 Kcal/kg NAR thermal coal was primarily offered at 1,310-1,320 yuan/t FOB with VAT at northern transfer ports, almost unchanged from late last week; offers for 5,000 Kcal/kg NAR coal dropped to 1,140-1,150 yuan/t from 1,150 yuan/t on December 16.
Offers varied from different traders with different market perceptions. But there was a generally agreement judgement that prices could continue to fall in the short term.
A Zhejiang-based trader spoke with certainty that there would be a series of “tiny corrections” as factories will shut the door for the Lunar New Year holiday after entering January. Also, coastal utilities have been prepared for January’s consumption after the previous purchases and ongoing imports.
He was ready to sell a Shaanxi 5,500 Kcal/kg NAR cargo at 1,300 yuan/t FOB with VAT. For 5,000 Kcal/kg NAR coal, his offer was just 1,140 yuan/t.
A Shanxi-based trader decided to cease giving offers for the remaining 50,000 tonnes of 5,500 Kcal/kg NAR coal, as the market demand was “as cold as ice”.
A Fujian-based trader reported coastal power plants will continue to buy imported low-CV cargoes this week. This may drive domestic prices down if traders at northern ports want to make deals.
Most utilities are well fed by supplies under term contracts and increased imports, while non-power sectors weaned off coal purchases as they were underperformed due to surging infections.
“A surge in Omicron infections in coming weeks is likely to discourage economic rebound,” a Guangdong-based trader said.
He also noted many traders at northern ports were infected and kept asking for sick leave, another reason for the market quietness.
“A few trades are heard at the weekends. Some cargoes of 5,500 Kcal/kg NAR coal were traded at 1,300 yuan/t and 5,000 Kcal/kg NAR at 1,130 yuan/t, both in very tiny volumes,” said an Inner Mongolia-based trader. “Single-mine cargoes are still expensive at northern ports, but the downward trend will not change,” he added.
China’s meteorological authority on December 19 renewed its blue alert for a cold wave, expecting temperatures to be 5 degree Celsius lower than normal in a large swathe of South China, part of Southwest and some places in the North until December 21.
Cold snaps have raised coal consumption at power plants. As of December 18, the daily coal burning at the six major coastal power groups touched 830,200 tonnes, the highest since early October, up by about 3% from a week ago. Their stockpiles are still enough to cover 14 days of use.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal
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