China's portside thermal coal market declined as the forecasted recovery of temperatures this weekend started to weigh on demand expectations.

 

The market saw subdued trading activities on December 22, with inquires from a few utilities failing to translate into deals, traders noted.

 

The 5,500 Kcal/kg NAR thermal coal was offered at around 950-960 yuan/t FOB with VAT at northern ports, down about 10 yuan/t from a day earlier. Cargoes of 5,000 Kcal/kg NAR were primarily quoted at 840-850 yuan/t FOB, with some common-quality cargoes even offered at around 830 yuan/t, while 4,500 kcal/kg NAR offers were in a larger range of 720-740 yuan/t.

 

Though utilities in some coastal provinces were advised to maintain coal stockpiles above 20 days of use, most of those with stocks below the level remained absent, traders noted.

 

"Some utilities did make inquiries this week, but most of them just asked for prices and didn't take real actions," a Shanxi-based trader said, noting only a few made small purchases.

 

A utility reportedly awarded a 5,000 Kcal/kg NAR cargo with 0.7% sulfur at 840 yuan/t, according to a Zhejiang-based trader, who considered it a fair price amid ample supplies in the market.

 

Most traders were bearish about the market next week, as temperatures are forecast to pick up in many places.

 

Market insiders had expected cold snaps to spur prices this week but this didn't happen, a Qinhuangdao-based trader noted. "After the temperatures rebound, it is challenging for the market not to fall further."

 

Starting from the weekend, the temperatures would bounce back notably in many places of the country, especially in central China where temperatures would increase by over 10 degree Celsius, according to the Central Meteorological Center.

 

Some traders expected the 5,000 Kcal/kg NAR prices to find a floor at 800 yuan/t over the potential downturn.

 

As of December 20, stockpiles at key power plants in coastal provinces could sustain generation for 14.8 days on average, compared with 15.4 days a week earlier.

 

Coal stockpiles at Qinhuangdao port remained elevated but on a downward trend. As of December 21, coal stocks at the port totaled 6.53 million tonnes, down from the recent high of 7.35 million tonnes on December 15. Stocks at Caofeidian were 12.61 million tonnes, falling straightly from 13.65 million tonnes on December 16.

 

On December 22, the CCI index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was at 950 yuan/t FOB with VAT, a 3 yuan/t fall from a day ago; 5,000 Kcal/kg NAR coal at 845 yuan/t, down 4 yuan/t, and that for 4,500 Kcal/kg NAR stood at 730 yuan/t, down 3 yuan/t.

 

Mixed trends in pithead market

The pithead market prices, however, showed mixed trends in major producing regions.

 

In Shaanxi's Yulin, some coal mines with favorable sales raised prices, but the majority maintained prices unchanged. A local miner pegged his selling price at 825 yuan/t, mine-mouth with VAT, for 6,000 Kcal/kg NAR with 0.3% sulfur, a 25 yuan/t rise from the previous day.

 

In Ordos, long-hauling transport showed no signs of improvement after highways were reopened. Most miners held prices steady, but some miners cut prices under sales pressure. A miner reduced the price of 5,200 kcal/kg NAR coal with 0.5% sulfur by 5 yuan/t to 648 yuan/t mine-mouth with VAT.