China's domestic thermal coal market witnessed divergent opinions about near-term developments, dampening  trading sentiment as most participants awaited clearer signals.

 

Since late last week, inquiries have decreased and some buyers have resisted high prices, resulting in a slight reduction in some offer prices to align with others. Many traders, however, were still keen to hold firm on prices, with no clear indications of selling their stocks at lower prices.

 

Two primary factors supported this stance. Firstly, the price gap between production areas and northern ports remained pronounced. Although some railway freight rates had decreased, prices at mines stayed robust, failing to significantly narrow the gap. Secondly, traders expressed confidence in the summer peak demand period.

 

While the state planner NDRC had not yet released directives to enhance energy supply before the summer peak demand, the Zhejiang Electricity Council urged local power producers on May 14 to prepare for potentially challenging circumstances.

 

Currently, coal stockpiles at power plants along eastern and southern coasts are adequate for 19 days of use, but this could decline fast with rising summer usage.

 

However, skeptics pointed out potential factors such as a rise in coal production from Shanxi, steady hydropower generation, and subdued demand from industrial plants.

 

Regarding expectations of rising coal supply in Shanxi, a bullish trader argued that it may not happen immediately, given the ongoing intensity of safety and environmental inspections.

 

The impact of this event hasn't been manifested in pithead markets. Most coal mines in Shanxi, Shaanxi, and Inner Mongolia on May 15 held prices steady. Only a few cut prices by 10-15 yuan/t as per their own sales conditions.

 

Market dynamics

Due to divided opinions, prices at northern ports didn't fluctuate significantly. Offers for 5,000 Kcal/kg NAR coal were stable at around 770-775 yuan/t FOB with VAT. Cargoes of 5,500 Kcal/kg NAR coal were around 860 yuan/t, and 4,500 Kcal/kg NAR grade reached 675-680 yuan/t, also unchanged from a day ago.

 

Inquiries focused more on cargoes at Huanghua port rather than Qinhuangdao and Caofeidian. Deals were seen at 760 yuan/t for blended 5,000 Kcal/kg NAR coal with 1% sulfur. Some 4,500 Kcal/kg NAR blended coal was traded at 660 yuan/t.

 

On May 15, 5,500 Kcal/kg NAR thermal coal traded at Qinhuangdao port was assessed by Sxcoal at 857 yuan/t FOB with VAT, the 5,000 Kcal/kg NAR grade was at 761 yuan/t, and the 4,500 Kcal/kg NAR grade was at 670 yuan/t, all unchanged since May 10.