Thermal coal prices bounced back at north China ports on September 13, driven by increased purchases by end buyers, exacerbating the ongoing supply shortage that has persisted for an extended period.

 

The benchmark 5,500 Kcal/kg NAR thermal coal was mainly offered at 880-910 yuan/t FOB with VAT at northern ports, up from 870-890 yuan/t a day ago; prevailing offers for 5,000 Kcal/kg and 4,500 Kcal/kg NAR rose by 10 yuan/t, reaching 770-790 yuan/t and 660-680 yuan/t, respectively.

 

A growing number of transactions were reported during the session. A trader based in Fujian sold a 5,000 Kcal/kg NAR cargo to a trader based in Tianjin at 800 yuan/t FOB at northern ports with VAT. Additionally, a 5,500 Kcal/kg NAR cargo was sold at 920 yuan/t FOB. Notably, the price for the latter was 10 yuan/t higher than the deal made by the Fujian-based trader with another trader based in Zhejiang a day earlier.

 

The Fujian-based trader additionally bid 915 yuan/t for a tender issued by a chemical producer for 5,500 Kcal/kg NAR coal. Although the result has yet to be confirmed yet, the trader expressed optimism that the chemical producer is likely to accept, citing sustained profit in the industry.

 

A second Tianjin-based trader concluded trade at 790 yuan/t FOB for a blended 5,000 Kcal/kg NAR cargo with 0.8% sulfur. A third Tianjin-based trader sold 100,000 tonnes of 5,500 Kcal/kg NAR coal with 1.2% sulfur at 885 yuan/t, following a deal of a 0.6% sulfur cargo at 880 yuan/t a day ago.

 

A Shanxi-based trader sold 30,000 tonnes of 5,000 Kcal/kg NAR coal with 1% sulfur at 785 yuan/t, while noting offers for truck-loaded cargoes of this grade already reached 780-790 yuan/t.

 

The recent increase in coal consumption at coastal power plants in East China may be a contributing factor to this surge in trading activity. Coal consumption at power plants in Shanghai, Jiangsu, Zhejiang, and Fujian has experienced varying degrees of growth. Guangdong and Shandong witnessed a noticeable reduction in their coal consumption.

 

Conversely, in regions such as Guangdong, Guangxi, and Hainan, daily coal consumption showed a declining trend, due to cooler temperatures resulting from recent rainfall that reduced demand for air-conditioning.

 

A Jiangsu-based source disclosed the local branch of the State Grid Corp. has scaled down power purchases from other provinces as the peak power demand period ended. As a result, local coal-fired power plants started to ramp up generation on their own.

 

"In Jiangsu, local coal-fired power plants were running at 60-70% of capacity in August, but now the utilization rate has increased to 70-80%," the source said.

 

The emerging demand has amplified the supply shortage in the market, especially for high-CV cargoes.

 

"The prices are unlikely to go down in the near term as there are not many saleable cargoes in the market," said an Inner Mongolia-based trader.

 

The supply shortage has been ongoing for an extended period due to the higher costs relative to selling prices at ports. This situation has deterred buyers from purchasing from mines.

 

Nevertheless, given the strong inflow of imports and the supplies through long-term contracts, it is less likely that the market will experience a sudden, sharp price surge, traders noted.

 

At mining areas, some coal mines in Shaanxi fell 10-20 yuan/t, while some others in Inner Mongolia increased 5-10 yuan/t. Prices in northern Shanxi were stable.

 

On September 13, the CCI index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed by Sxcoal at 885 yuan/t FOB with VAT, up 10 yuan/t from a day ago; 5,000 Kcal/kg NAR coal assessment was at 782 yuan/t, up 16 yuan/t day on day, and that for 4,500 Kcal/kg NAR at 670 yuan/t, representing a 10 yuan/t rise.