Sentiment in China's domestic thermal coal market appeared to be weakening on November 23, with traders speeding up sales before prices returning recent gains.

 

On November 23, prevailing offer prices for 5,500 Kcal/kg NAR thermal coal reached 950-960 yuan/t FOB with VAT at northern ports, about 10 yuan/t higher than a day earlier. Cargoes of 5,000 Kcal/kg and 4,500 Kcal/kg NAR grades edged higher to 820-825 yuan/t and 725-730 yuan/t, respectively.

 

The market saw a growing number of deals concluded during the session. Some deals were clinched at unexpectedly high prices, possibly due to urgent demand from buyers whose vessels have waited off the ports.

 

Two Shanxi 5,000 Kcal/kg NAR cargoes were traded at 830 yuan/t for 1% sulfur and 835 yuan/t for 0.6% suflur, according to a Qinhuangdao-based trader.

 

But in most cases, the trading level was around 820-825 yuan/t. In the afternoon, some traders found it difficult to settle at prices above 820 yuan/t.

 

"With more sellers entering the market, quotations for 5,000 Kcal/kg NAR coal started the day at 835 yuan/t and gradually fell to 820 yuan/t," said another Qinhuangdao-based trader.

 

A Shanxi 5,500 Kcal/kg NAR cargo with 1% sulfur was settled at 940 yuan/t FOB for late December delivery, according to a Shanxi-based trader. That marked a pullback from over 945 yuan/t reached a day earlier, though it was still up from around 930 yuan/t earlier in the week.

 

"Demand is not strong and most traders don't think the gains can last long," said the trader. "More cargoes putting up for sale indicate traders are making an attempt to cash in on recent price rises caused by cold weather."

 

An offer of 935 yuan/t for an Inner Mongolia 5,500 kcal/kg NAR coal with 0.8% sulfur met with resistance from some cement producers, who wanted to seek lower-priced imported coal instead.

 

"Stockpiles remain high, especially at ports where inventory pressure is still significant," said an Inner Mongolia-based trader. "High stocks make it difficult to sustain prices at high levels for long."

 

As of November 22, coal stockpiles at Qinhuangdao and Caofeidian remained elevated at 6.3 million and 13.3 million tonnes, respectively.

 

While temperatures have dropped recently, the intensity varied in different regions, limiting the potential for increases in coal consumption in coastal provinces such as Guangdong and Fujian. Future weather changes are also difficult to predict and cannot firmly support high prices long-term, insiders pointed out.

 

On November 22, the CCI index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed by Sxcoal at 940 yuan/t FOB with VAT, up 3 yuan/t day on day; 5,000 Kcal/kg NAR coal assessment was at 818 yuan/t, a 4 yuan/t rise, and that for 4,500 Kcal/kg NAR at 720 yuan/t, up 5 yuan/t from a day prior.