China's coal-dedicated Daqin railway commenced its spring maintenance on April 1, reducing daily shipments from approximately 1.2 million tonnes in late March to about 1 million tonnes. Although this may impact inflows to Qinhuangdao port, high inventories at northern ports and weak demand suggest its impact on the thermal coal market is likely limited.

Although Daqin maintenance historically reduced port inventories and spurred price recoveries, its market influence has waned as its share in coal transshipment at northern ports has declined, amid the expansion of alternative routes and freight discounts offered by regional rail bureaus.

Meanwhile, railway authorities have taken measures to limit impact of the maintenance, including rerouting freight and optimizing train schedules, making it unlikely for a significant impact on overall supply during the month, which typically sees a seasonal slowdown in power demand and modest support in industrial coal consumption.

The combined coal stocks at northern ports of Qinhuangdao, Caofeidian, Jingtang, and Huanghua still hovered at a relatively high level of above 30 million tonnes on April 2, continuously restraining any significant price improvements.

At Qinhuangdao port, where the line directly leads to, lower rail coal inflows resulted in a quick 80,000-tonne reduction on April 2 compared with the start of the month, but the drop is far than enough to reduce its inventory sharply from a high of above 6.8 million tonnes.

Coal transactions lack momentum at N ports

Trading activity eased again at northern ports as more traders adopted a wait-and-see approach amid firm offers from miners and buyers' firm stance.

Some participants expected the sentiment support brought by the ongoing Daqin maintenance, together with cost support from production areas, to counter bearish factors including the concentrated maintenance of power-generating units in April, leaving prices largely rangebound.

Offers of 4,500-5,000 Kcal/kg NAR coal stayed firm, but traders ascribed this partly to inactive participation of traders in new cargoes due to a lack of profit.

"Despite marginal increases in offering levels, the actual demand remains limited and buyers are unwilling to accept the current offers," said a Beijing-based trader. He submitted a bid for 0.6%-sulfur 5,000 Kcal/kg NAR coal at 600 yuan/t FOB with VAT northern ports for a tender on April 2, but the utility awarded it at only 596 yuan/t.

Meanwhile, sources said a few mines in Inner Mongolia have reduced low-CV coal production due to safety inspections, which has impacted the volume being dispatched from local railway stations. This partly contributed to tight availability of 4,500 Kcal/kg NAR coal at northern ports.

One Ordos-based miner refused to offer this grade of coal at prices lower than 530 yuan/t FOB northern ports, against buying indication of 525 yuan/t.