China's portside thermal coal prices continued their downward trend on December 28 for the sixth consecutive session, as demand from utilities showed no signs of improvement amid warmer weather.

 

China is forecast to see low precipitation nationwide in the next 10 days, accompanied by temperatures reaching multi-year normal levels or even higher, said the National Meteorological Center. This could potentially diminish the demand for heating, contributing to the ongoing decrease in thermal coal prices.

 

Also, as the New Year holiday approaches, many buyers and sellers adopted a "wait-and-see" stance, seeking opportunities post the three-day holiday.

 

While the overall trading liquidity remained stagnant, more inquiries seemed to appear in the market. A few sellers tried to close business for year-end financial review, which resulted in some low-priced trades.

 

On December 28, some 5,500 Kcal/kg NAR thermal coal with sulfur less than 1% was sold at 920 yuan/t FOB Jingtang with VAT, according to a Hebei-based trader. At the same port, a 1%-sulfur 5,000 Kcal/kg NAR cargo traded at 815 yuan/t.

 

A Tianjin-based trader sold 40,000 tonnes of 4,500 Kcal/kg NAR coal with 1.2% sulfur at 700 yuan/t.

 

The disparity between bids and offers remained significant. Several traders reported an absence of buying interest at above 930 yuan/t for 5,500 Kcal/kg NAR, but offers were generally above this level, a threshold below which losses could incur, traders said.

 

For 5,000 Kcal/kg NAR grade, trades were struggling to secure above 820 yuan/t as many buyers only accept 810 yuan/t and below.

 

Selling prices prevailed at around 710 yuan/t for 4,500 Kcal/kg NAR, below which few suppliers were willing to sell, an Inner Mongolia-based trader noted.

 

The bearish sentiment continued to dominate the market, with most insiders anticipating further falls after the holiday. It would be challenging to maintain current levels, as coal prices were falling at mines.

 

But the market still has a chance to rebound in January as the temperature is typically at its lowest in early and middle of the month, a Qinhuangdao-based trader pointed out. "If there is extreme weather, demand will pick up again."

 

Coal stockpiles at coastal power plants remained at 14.5 days of coverage averagely as of December 25 compared to 14.8 days a week earlier, according to traders, leaving room for future replenishment.

 

On December 28, the CCI index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was at 928 yuan/t FOB with VAT, a 2 yuan/t fall from a day ago; 5,000 Kcal/kg NAR coal at 818 yuan/t, down 5 yuan/t, and that for 4,500 Kcal/kg NAR stood at 710 yuan/t, down 3 yuan/t.

 

Prices range-bound at mines  

The pithead market continued to face weakness in both supply and demand. Most miners made no price adjustments, but a few mines adjusted prices based on sales.

 

On December 28, among 90 mines surveyed by Sxcoal, only three raised prices by 29.3 yuan/t on average, 10 others cut prices by 18.4 yuan/t averagely, and the remaining 77 mines kept prices unchanged.

 

With more mines completing their annual production targets, production suspensions and cuts increased, leading to a reduction in the overall supply.

 

Many mines in Inner Mongolia have informed clients that no trucks from or traveling through Shanxi and Hebei will be accepted, as part of coordinated efforts to alleviate air pollution.

 

Shaanxi has also alarmed warnings against air pollution due to bad diffusing conditions.