Tepid demand is still affecting thermal coal prices at China's northern transfer ports, but some participants suggest the decline may slow as prices hit a year-and-a-half low, leading to increased resistance.

On December 20, the CCI index for 5,500 Kcal/kg NAR thermal coal traded at Qinhuangdao port was assessed by Sxcoal at 776 yuan/t and 5,000 Kcal/kg NAR grade at 675 yuan/t FOB with VAT, both down 4 yuan/t day on day and hitting the lowest levels since mid-June, 2023. The index for 4,500 Kcal/kg NAR grade also fell 6 yuan/t to 570 yuan/t.

With coal inventories at northern ports declining from historically high levels, some sellers have exhibited increasing reluctance to concede to low bids that could precipitate greater losses. Several sellers have opted to temporarily suspend sales to better assess market dynamics.

"There's some genuine demand approaching the end of the month, yet the volumes are still small and bid prices are too low to accept," said a Shanxi-based miner source. He turned down a bid for 0.6% sulfur 5,000 Kcal/kg NAR coal at 665 yuan/t, which was 10 yuan/t lower than the asking level.

A similar resistance was noted by an Ordos-based producer in Inner Mongolia, who insisted on offering 1% sulfur 4,500 Kcal/kg NAR coal at no less than 580 yuan/t, despite receiving counteroffers below 575 yuan/t.

These resistances, though unlikely to reverse the broader downtrend, should provide some respite from the rapidly accelerating decline seen this week. Prices have fallen by over 20 yuan/t this week, compared with 5-10 yuan/t in the first week of the month, Sxcoal understood.

On December 20, the total coal stocks at Bohai-rim ports stood at 27.41 million tonnes, falling 11.62% from the record high seen on November 29, the lowest in over a month. However, the volume remained higher than levels in January-October this year, Sxcoal's data showed.

Some sellers are betting that further decline in temperatures may bolster coal burns at power plants and drive restocking demand in the near term.

Import market 

The seaborne import market saw a lack of activities as Chinese traders struggled to seek cargoes profitably amid resilient offers from foreign sellers and reduced participants approaching the Christmas holiday.

Panamax cargoes of Indonesian 3,800 Kcal/kg NAR coal were offered at $52.5-53/t FOB Kalimantan, while buying indications were $51.5-52/t, sources said.

Chinese traders continued to shun mid- and high-CV Indonesian thermal coal as they lost their price advantage.

One Fujian-based trader in southeastern China expected a more obvious price drop might happen after the New Year if the domestic market remains weak.

Liquidity in the imported Mongolian thermal coal market also diminished at major Chinese border ports. Some traders have reportedly withdrawn from the market for the holidays due to significant selling pressure and marginal profitability. 

"It is challenging to sell Mongolian middling coal at 610 yuan/t, ex-stock Ganqimaodu with VAT," said one Inner Mongolia-based trader source, adding the import costs are around 600 yuan/t.

Trades were likewise hard at Mandula border port despite selling at cost levels, according to the trader.