Thermal Coal

Production area Thermal coal prices were stable as a whole in major producing regions, yet still faced downside risks. Some mines with better pricing edge achieved a rough balance between production and sales, thanks to steady shipments to long-term contract buyers and persistently on-demand purchases from metallurgical and chemical plants. This helped keep prices stable. Downstream buyers, however, aggressively pressed for lower prices, curbing spot coal sales. Increased stock accumulation at a few mines and muted demand further weighed on their thermal coal prices. With uncertainties in the near-term price trend, spot traders mostly adopted a wait-and-see approach.

Northern port Portside thermal coal prices continued to dip modestly. Despite peak coal consumption at power plants, traders were suffering from difficulties in selling, as well-stocked utilities were not eager to restock and kept a hard bargain. Participants expected prices to extend drops if coal inventories at power plants fail to deplete significantly before the peak consumption period ends. However, portside prices are less likely to decline sharply, backed by high costs in both port-bound coal shipments and imports.

Import market Bearish sentiment sustained in the seaborne import coal market, as Chinese power utilities were inactive in floating tenders. Bidding prices to a southern Chinese utility tender for 3,800 Kcal/kg NAR coal fell to below 490 yuan/t, DDP with VAT. The tender-awarded prices also hit the lowest so far in the year. Importers noted that overseas prices may face sustained downward pressure in the near term. Indonesian 3,800 Kcal/kg NAR coal was offered at $52.5-54/t FOB on a Panamax basis.

Coking coal

The overall coking coal supply still hovered high, despite production suspension and reduction at a few mines induced by increased rainfall. Steel prices repeatedly refreshed new lows. Steelmakers hence opted to pass their losses to the coke and coking coal sectors. Coking plants mostly prioritized depleting existing stocks, given the ongoing third round of coke price cuts starting from August 8 and expectations of additional declines. This led to quiet coking coal trading activity. Most mines still faced offtake pressure despite lower prices, intensifying inventory pressure, and fueling miners' pessimistic outlook on further prices.

Regarding seaborne import market, weak demand from international buyers exerted downward pressure on coking coal prices. Australian coal transactions languished this week. Overseas traders turned to hold prices firm after prices retreated to relatively low levels, leading to continuous price negotiations. Offer prices for Australian hard coking coal were temporarily stable at $215/t FOB, or about 1,914 yuan/t CFR China with VAT, leaving certain arbitrage room for domestic traders.

Met coke

Major steelmakers in Hebei and Tianjin decided to cut coke prices by 50-55 yuan/t, marking the third coke price reduction. Coking plants enjoyed acceptable profits and stable operations thanks to gradually shrinking feed coal prices. Persistently weak steel consumption and declined steel prices worsened steelmaking losses, resulting in more shutdowns for maintenance and faded buying appetite for coke. Coke stocks hence continued building up at coking plants. The coke market may weaken further in the short term.