China's domestic thermal coal is under upward pressure as another round of coal snaps is expected this week, but it is still challenging to persuading buyers to step up buying amid high stockpiles.

 

The market continued to grapple with anemic demand on the first working day of the week, a typical session of low trading activity.

 

On November 27, offer prices dipped compared with late last week, with the 5,500 Kcal/kg NAR quoted at 940-945 yuan/t FOB with VAT at northern ports, a 5-10 yuan/t fall from November 24.

 

Cargoes of 5,000 Kcal/kg NAR coal were offered in a larger range from 815 yuan/t to 840 yuan/t, compared with around 820 yuan/t late last week. A bid for this grade stood at 818 yuan/t.

 

For 4,500 Kcal/kg NAR, offers held unchanged at 715-720 yuan/t FOB. A trade for a 1%-sulfur cargo was concluded at 720 yuan/t FOB.

 

Another cold front is forecast to sweep across northern China this week, cutting temperatures nationwide. But, participants generally showed not much confidence in its effect on the market.

 

The National Meteorological Center forecast the new cold air mass will influence regions north of the Yangtze River from November 27, lowering temperatures by 4-6 degrees Celsius on average. Some parts of Inner Mongolia and eastern and central China may see drops of over 8 degrees.

 

This month has seen two bursts of chilly weather. While they continued to push down the temperatures, coal consumption at power plants hasn't increased significantly.

 

In the month to November 27, daily coal consumption of the six major coastal power groups just increased from 770,000 tonnes to 800,000 tonnes, with their stockpiles staying above 18 days of use.

 

This came as the cold temperatures didn't last long. Apart from the northeast and some places in Inner Mongolia, many places saw the temperatures rebound after a cold snap.

 

Meanwhile, the market shrugged off an emergency event that the conveyor belt got fire and burned cables at 36-40 piers of Jingtang port on November 23. This accident led to a widespread power outage, resulting in delays in coal train discharging and vessel loading operations.

 

Sources noted coal trains supposed to discharge at these piers are diverted to the old Jingtang terminal where workers need to operate manually, before the piers' reopening after an estimated 7-10 days of maintenance.

 

However, sources noted the suspension is not substantial to the overall operations at Jingtang ports, as current outbound shipments are far lower than its designed capacity.

 

Port inventories have edged lower recently but at a slow pace, fluctuating within a relatively narrow range. The high stockpiles continued to weigh on potential price rallies.

 

Qinhuangdao's coal stocks stood at 6.33 million tonnes on November 24, stable week on week yet 16.15% and 12.83% higher from the month-ago and the year-ago levels, Sxcoal's data showed.

 

At Caofeidian port, where spot coal accounts for a higher share than that at Qinhuangdao, reached 13.19 million tonnes, a 3.61% fall from a week ago and a stark contrast to the year-ago level of 10.19 million tonnes.

 

Market participants noted negotiations remained stuck as buyers resist major price hikes while traders are unable to clear cargoes without raising offers to cover high cost. A breakout may depend on the weather condition and the pace of destocking across the supply chain.

 

On November 27, 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; 5,000 Kcal/kg NAR coal assessment was at 818 yuan/t, and that for 4,500 Kcal/kg NAR at 720 yuan/t, all unchanged from November 24.