Indonesian thermal coal prices are likely to further decline, after major power utilities from its top buyer China suspended or canceled tenders amid strong inventory coverage.

One state-run Chinese utility, which typically floats tender for seaborne thermal coal around Thursday each week, has stayed muted since December 5. Another major utility canceled its latest tender without locking in any January-February delivering Panamax cargoes at 476 yuan/t and above on a CFR China basis with VAT, Sxcoal learned.

Abated purchasing appetite from power groups was partially resulted from sufficient supplies, with some already seeking cargoes to be delivered in April next year. In addition, high inventory levels prevented them from placing new orders, despite the recent increase in coal consumption.

Data showed, coal stocks held by power plants in coastal provinces in China mildly fluctuated compared with the week-ago and the month-ago levels, although coal burns climbed by 7.7% and 13.3% respectively during the same period. The inventory was able to cover 16.5 days, which was higher compared with the same period in 2023 and 2022.

Competing for pockets of demand, Chinese traders continuously lowered their bidding prices. As of late last week, the lowest bids received by utilities for 3,800 Kcal/kg NAR coal fell to 472 yuan/t, CFR China with VAT, translating to $50.8/t FOB East Kalimantan.

That was well below offer prices from foreign miners. Panamax cargoes of the same-CV coal from Indonesian sellers for January-February loading were reported at $52.5-53/t FOB, with one cargo sold for just under $52/t. Transactions of some January and February-loading Supramax cargoes of same-CV coal were heard between $50-51/t.

Buying indications for Panamax cargoes of Indonesian 3,600 Kcal/kg NAR coal were heard at $49.5-50/t on December 16.

"Seaborne thermal coal prices declined at a slower rate compared with domestic coal, partly weakening traders' buying interest. Besides, as domestic prices fall again, imported coal prices are likely to further head south," said a Fujian-based trader in southeastern China.

While Chinese end users and traders adopted a wait-and-see stance, some India buyers also followed suit. Robust domestic supplies to power plants also limited their purchases of seaborne cargoes.

On December 16, the CCI index for Indonesian 3,800 Kcal/kg NAR thermal coal stood at $58.8/t CFR South China and $51.0/t FOB Kalimantan, both unchanged compared with late last week.

For high-CV grade, offers of Australian 5,500 Kcal/kg NAR coal were heard at $84-85/t FOB, while a negotiation was undergoing at around $83.5/t. Some inferior quality coal supplies, however, were offered at $83/t FOB or $95.5/t CFR China, according to a southern Chinese trader source.

"Transactions for high-CV coal remain unprofitable at present. We must actively reduce import prices to counter the potential losses from the continued decline of the Chinese yuan," he added.

In China's domestic market, thermal coal prices remained on the downward trend at both ports and mining areas. Sxcoal surveyed 90 thermal coal miners on December 16, while 23 lowered prices by averagely 25 yuan/t while no mine raised prices.

A few transactions for 5,000 Kcal/kg NAR coal are likely to fall below 695 yuan/t, FOB northern ports with VAT, down by about 5 yuan/t from several days earlier, sources said.

On December 16, the CCI index for 5,500 Kcal/kg NAR thermal coal traded at Qinhuangdao port was assessed by Sxcoal at 795 yuan/t and 5,000 Kcal/kg NAR grade at 693 yuan/t FOB with VAT, both down 4 yuan/t from late last week. The index for 4,500 Kcal/kg NAR grade also fell 5 yuan/t to 592 yuan/t.