The stockpiles of thermal coal were seen building up at China’s northern ports on May 9, impacted mainly by the sustained slow liquidity of the fuel in the spot market despite recent warming of market sentiment.
Total coal inventories at the eight major ports in North China climbed up to 22 million tonnes on Thursday, the first time in four months. Meanwhile, the inventory level was also 1.8% higher than Wednesday, Mysteel’s survey results show.
The main reason behind the portside coal accumulation was domestic coal users’ persistent lukewarm interest in restocking new coal cargoes despite some occasional buys in small quantities, as their current operations – which haven’t been lifted significantly – capped their consumption of the fuel, Mysteel learned from sources.
For example, coal outbound throughput from the eight northern ports stood at 944,000 tonnes on Thursday, largely flat compared with the day-ago level and lower by a substantial 27.1% on year, according to the same survey.
As such, the sentiment in domestic spot thermal coal market cooled slightly on Thursday, signaling flagging confidence among participants, sources revealed. Mysteel’s assessments for the prices of 5,500 kcal/kg, 5,000 kcal/kg and 4,500 kcal/kg NAR coal maintained a mild Yuan 5/tonne (0.7/t) rise on day to Yuan 855/t, Yuan 765/t and Yuan 665/t, respectively, all on FOB basis at northern ports and with VAT.
However, the summer peak season for coal consumption in China is expected to arrive a bit earlier this year, possibly in late-May, when temperatures may be higher by 2-3 degrees Celsius than the same period of previous years in a wide range of northern China areas, according to the forecast by the National Meteorological Administration. The hotter weather could spur domestic power plants to hoard on thermal coal in advance, an industry insider said.
China’s pithead thermal coal market extended its strong run on May 9, with coal transactions largely smooth and coal prices gaining more upward momentum, Mysteel learned from sources.
A source disclosed that bullish sentiment among participants was further fueled by another rise of Yuan 30-48/t in trading prices of various thermal coal grades from three major miners in Northwest China’s Shaanxi in auctions as compared with the last session.
As a result, among the 144 thermal coal mines under Mysteel’s monitoring, 63 or 43.8% of these mines raised their offering prices by an average of Yuan 17/t on Thursday, while the rest 81 mines held their offers steady.
Note: This article has been exchanged under the article exchange agreement between BigMint and Mysteel.