China's portside thermal coal market has stayed stable in recent days, due to subdued demand. However, traders are anticipating a potential turnaround over the weekend as temperatures are predicted to significantly drop.

 

On December 7, the 5,500 Kcal/kg NAR thermal coal was primarily offered at 930-940 yuan/t FOB with VAT, unchanged from a day earlier. Offers for 5,000 Kcal/kg and 4,500 Kcal/kg NAR grades also held steady at 820-830 yuan/t and 720 yuan/t, respectively.

 

The temperatures are forecast to plummet this weekend, with over 20 degrees Celsius drop in many places of Northeast and North China, according to the National Meteorological Administration.

 

The colder weather would boost buyers' interest in restocking, a Zhejiang-based trader noted. "We think this would be the last chance for the spot market to move upward."

 

It has been an unusually mild period for this time of year in northern regions, resulting in moderate heating demand so far. Shanxi's capital city Taiyuan has recorded the warmest day of 12 degrees for December since 1951.

 

During the ongoing China Coal Trade Fair in Tangshan, Hebei province, 32 major coal miners and end users signed medium- and long-term coal contracts for 2024, totaling around 400 million tonnes. As insiders were still seeking potential clues from the conference, which concludes on December 8, the market remained in a dearth of activity.

 

Today's market, however, observed a trade was concluded at 730 yuan/t for three 4,500 Kcal/kg NAR cargoes with 0.7% sulfur, which was uncommonly seen in a thinly-traded session.

 

An Inner Mongolia-based trader expressed buying interest at 825 yuan/t for 5,000 Kcal/kg NAR, a level few cargoes could match. However, a Hebei-based trader noted an offer of 810 yuan/t for 60,000 tonnes of blended 5,000 Kcal/kg NAR coal, which didn't elicit interests.

 

"The market is difficult to move in either direction right now," said another Zhejiang-based trader. "Consensus cannot be reached upon the market direction, unless the weather change can truly drive up coal consumption."

 

Currently, inland power plants held stockpiles equivalent for 23.5 days of use, down from 24.5 days a week ago; coastal plants saw their stockpiles could be used for 16.8 days, down from 17.7 days a week ago.

 

While coal consumption has increased seasonally at utilities, China's coal supply system has improved. Railway departments will deliver coal to power plants with fast falling inventories through the supervision system. Therefore, how the potential temperature drop could drive the market remains to be seen, insiders noted.

 

On December 4, the CCI index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was at 933 yuan/t FOB with VAT, flat from a day earlier; 5,000 Kcal/kg NAR coal at 823 yuan/t, a 3 yuan/t rise on a daily basis, and that for 4,500 Kcal/kg NAR stood unchanged at 715 yuan/t.