China's domestic thermal coal prices continued to decline on December 19, with no clear support in sight, while some traders anticipate stabilization only until the Chinese New Year holiday.

Offer prices for 5,000 Kcal/kg NAR thermal coal were around 770-780 yuan/t FOB with VAT at northern transfer ports. Cargoes of 5,000 Kcal/kg NAR were mainly offered at 675-685 yuan/t FOB.

"The overall trading liquidity is very thin," said a Zhejiang-based trader. "Only buyers with chartered vessels at northern ports are seeking to purchase." 

The trader reported end buyers bid aggressively for 5,000 Kcal/kg NAR Ordos coal with 0.6% sulfur at 680 yuan/t, while some can only accept buying prices at 675 yuan/t.

One Suzhou-based trader reported a negotiable offer of 675 yuan/t for Shanxi 5,000 Kcal/kg NAR thermal coal with 1% sulfur, indicating he might accept a price discount of 3-5 yuan/t.

Bids for 5,500 Kcal/kg NAR coal mainly centered around 780 yuan/t, traders said, and some bids for this coal grade were even at a 6-7 yuan/t discount to CCI 5500 index.

For 4,500 Kcal/kg NAR cargoes, some traders believe buyers will only make purchases if prices are below the index.

A continuous decline in pithead prices and slow increase in coal consumption at power utilities have diminished traders' hopes for a year-end price rally, one Hebei-based trader said. "Some expected purchases to increase ahead of the Spring Festival holiday." 

End buyers typically stock up ahead of the Chinese traditional holiday, leading to a rise in portside prices.

"With sufficient stock at ports and utilities, coal prices are likely to continue declining, and demand may remain low before the holiday," said another Zhejiang-based trader. Some traders anticipate prices to stabilize when coal stocks at northern ports drop below 20 million tonnes.

Significant losses have led to increased resistance among traders, raising concerns that they may halt operations if prices decline further.

"Prices for 5,500 Kcal/kg NAR thermal coal in Ordos have fallen to 560-580 yuan/t at the mine-mouth, including VAT, which has reduced my costs. However, my delivery times cannot keep up with the pace of the price decline," one Shandong-based trading source said. "Given the ongoing downtrend, few are willing to buy or restock."

On December 19, the CCI index for 5,500 Kcal/kg and 5,000 Kcal/kg NAR coal traded at Qinhuangdao port was at 780 yuan/t and 679 yuan/t FOB with VAT, both down 5 yuan/t from a day earlier; and that for 4,500 Kcal/kg NAR stood at 576 yuan/t, falling 6 yuan/t from a day ago.

Prices slump at mines

Mine-mouth prices are also falling quickly. In Yulin, Shaanxi, a coal miner cut prices twice on December 18, totalling 40 yuan/t. In Ordos, Inner Mongolia, declines so far this month have reached 80-100 yuan/t.

"Bearish sentiment from the portside market has dampened buying interest at mines," said an Inner Mongolia-based trader.

Trading activity remained subdued despite previous price cuts, with only minor purchases by local chemical plants for essential needs. according to the trader.