Chinese domestic thermal coal market stayed at an impasse as both buyers and sellers adhered to their positions with slightly different perceptions of the market development, but participants said utilities still have demand for the material.
Traders reported almost no trades concluded on February 16, as buyers stayed out of the downward market. But, they still believed the demand was resilient, citing a recovery in industrial activity after the Lantern Festival (February 15), which marks the end of the Lunar New Year celebrations, as well as relatively cold weather.
Also, traders said the current supply is still not enough to cover the demand. “The supply indeed is rising, but power plants are still looking for cargoes, although they are reluctant to accept current price levels,” one Beijing-based utility source said.
Trading levels of the benchmark 5,500 Kcal/kg NAR thermal coal were asked not to exceed 900 yuan/t FOB with VAT at northern transfer ports, but, according to traders on February 16, the benchmark coal was mainly offered at 1,000 yuan/t, down a lot from a day ago though.
Accordingly, offers for 5,000 Kcal/kg NAR coal fell to around 900 yuan/t and 4,500 Kcal/kg to 800 yuan/t.
“Some buyers are still inquiring in the market, but they are refrained from making deals at current prices,” said a Hebei-based trader. “I’m afraid the market would be in a panic purchase due to the pent-up demand when impact of the government intervention diminishes.
Offers for some premium cargoes with low sulfur content remained a premium of 20 yuan/t to common grades, traders reported. “Power plants are still holding back, not daring to buy market coal at high prices due to the government’s price limit policy.”
A state-owned utility on February 16 was looking for spot cargoes at 898 yuan/t for 5,500 Kcal/kg NAR coal, 816 yuan/t for 5,000 Kcal/kg NAR and 734 yuan/t for 4,500 Kcal/kg NAR.
“The prices are almost impossible to get supplies in the market,” said a Zhejiang-based trader. “No one is willing to sell at such low prices.”
As Sxocal reported earlier, many utilities saw an unbalanced storage with high-CV coal at a quite low level, pushing them to seek in the seaborne import market, although their overall inventories are at reasonable levels.
Coal stocks have stayed above 5 million tonnes at Qinhuangdao port for days. As of February 16, the port had 5.03 million tonnes of coal stocks, a substantial increase compared to the pre-holiday level of 4.17 million tonnes. It, however, was still lower than the 5.3 million tonnes of stocks on the same day a year ago.
The futures market has been falling for the fourth consecutive day on February 16 with a 0.64% drop from a day ago at close on the daytime session.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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