Prices of seaborne imported thermal coal remained competitive in China following last week's rallies, spurring fresh tenders from Chinese power utilities seeking to replenish stockpiles ahead of winter. Lower inventories at some southern utilities and domestic supply constraints also bolstered seaborne cargoes.

China Huaneng Group, one of the country's largest state-owned power generators, issued a tender to purchase 18 cargoes totaling 1.08 million tonnes of imported thermal coal for delivery in November, according to an official notice posted on the company's online trading platform late last week. Of these, nine cargoes must be sourced exclusively from Indonesia, while the remainder can be supplied from Indonesia, Australia, Russia, or Malaysia.

One major utility in southern China also floated a tender due on October 22 seeking seaborne thermal coal cargoes, Sxcoal learned.

The still high tender volume to some extent underscores sustained buying interest for imported cargoes even after the latest robust price hikes. This could be partly ascribed to a widening price competitiveness.

On October 17, Indonesian 3,800 Kcal/kg NAR coal maintained a 57.87 yuan/t advantage over comparable domestic cargoes, widening the gap by more than 21 yuan/t week on week, Sxcoal's calculation showed on October 17.

"Domestic coal prices have surged sharply last week, and imported coal followed suit albeit at a slower pace," said a Fujian-based trader source. "But imported cargoes are still more cost-effective, especially for southern utilities whose inventories remain low. Even if temperatures moderate and power demand drops slightly, the window for restocking is narrowing."

Coal stocks held by coastal power plants in China on October 15 fell by 3% month on month and were 5.2% below the year-ago level, data showed.

Offers of the most-liquid 3,800 Kcal/kg NAR grade on October 20 were heard steady at about $48/t FOB, while transactions largely hovered within $47.5-48/t.

However, some participants expected prices to plateau this week. "Sentiment has slightly cooled since late last week, with offering facing pressure," said a Guangdong-based trader source. "The near-term momentum will be closely linked to how power load changes with the next cold wave," he commented.

Freight costs eased marginally but remained high, with the East Kalimantan to South China Panamax route assessed at about $8.5/t, and South Kalimantan to South China near $9/t. These added to delivered costs of seaborne cargoes and squeezed the room for further increases of FOB prices amid diminishing tolerance of Chinese utilities over price hikes.

However, most participants saw a downward correction as unlikely, at least during the week. Offers from Indonesian miners stayed firm due to limited selling pressure. Meanwhile, supply from South Sumatra was still restrained due to earlier rainfalls and a lack of dedicated roads to allow smooth outward deliveries from mining areas.

Additional support was also seen from the expected decline in domestic production due to tightened safety inspections during the important political plenum period. Meanwhile, production was also curbed by overproduction inspections.

In the high-CV market, Chinese utilities' demand for high-CV coal from Russia and Australia slightly increased, according to the recent tenders seen by Sxcoal.

Australian 5,500 Kcal/kg NAR coal was offered to southern ports at 750-760 yuan/t CFR China with VAT, yet some utilities were cautious in buying.

A second Guangzhou-based trader source expected a gradual acceptance of prices by end users. "With inventories running low and winter heating in the northern part, utilities can't afford to wait for prices to retreat," he said, adding expected temperature decline in southern China may also slow coal burns.

Several sources also reported congestion at Australian and Russian ports, which could add uncertainties to utility restocking efficiency and potentially provide additional support to prices.