Thermal coal prices at northern China ports continued to decline rapidly, tending to break through psychological support levels for the second time in less than three weeks. With port coal stocks ascending continuously to a high level, any attempts from sellers to even hold prices proved vulnerable.

On December 17, the CCI Index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port stood at 732 yuan/t FOB, falling 9 yuan/t day on day and marking a 17th straight session of decline. The Indexes for 5,000 Kcal/kg and 4,500 Kcal/kg NAR coal were 630 yuan/t and 530 yuan/t, respectively, both down 8 yuan/t and hitting their lowest levels in two months.

Some offers of 5,000 Kcal/kg NAR Ordos coal were heard at a 610-620 yuan/t range, FOB northern port with VAT, while a cargo of Shanxi 1.2%-sulfur same-CV coal was heard quoted at 600 yuan/t, already hitting the current psychological support line. Several sources confirmed a utility purchase happening below the threshold, making a near-term floor support elusive.

One Shaanxi-based trader source offered high-quality 5,500 Kcal/kg NAR coal at 730 yuan/t, but confirmed little appetite from buyers.

"Sellers feel increasingly difficult to offload stocks even though some cargoes are offered at or below their costs," the trader said. "Overall liquidity remains subdued, and a slight mid-week increase in inquiries has not led to actual orders."

Lower-CV 4,500 Kcal/kg NAR grade saw a gentle rise in deals, though at depressed prices. A cargo of 4,500 Kcal/kg NAR Shanxi coal changed hands as low as 508 yuan/t, sources said.

Some sellers are likely to further slash prices to seek liquidity, after portside authorities restricted their arrivals of new shipments due to bloated inventories. The overall coal stocks at major Bohai-rim ports kept building up, approaching 30 million tonnes, a relatively high level for the same period in history, according to Sxcoal's data.

Some traders transferred partial stocks southwards, sources said, pushing inventory levels at Yangtze River ports to a four-month high, showed the Sxcoal data.

Supply conditions remained loose as a whole in major production areas, offering no respite to the market downturn. Sources said miners in coal-rich Inner Mongolia largely maintained normal output in December, with only a few in production curbs after meeting annual targets. Supply from other production bases in Shanxi and Shaanxi was also broadly stable.

However, demand has consistently been dampened by mild winter weather, resulting in a modest improvement in heating demand. Meanwhile, strong renewable generation kept offsetting the moderate increment of power demand, capping power plant loads.

Utilities were not actively tendering, traders said, with high port stocks and ample plant inventories dampening the urgency for spot replenishment.

Some participants foresaw that spot prices may potentially drift toward long-term contract levels, and a rebound appears unlikely without a clear pickup in demand or policy-driven supply restraint.

Import coal prices weaken again

The imported thermal coal market was similarly weak. One Chinese utility reportedly shelved plan to buy as spot prices continued to slide.

Selling pressure prompted some traders to continue slashing their bids to utility tenders, with Indonesian 3,800 Kcal/kg NAR coal softening to below 430 yuan/t CFR with VAT South China.

A low bid for first-half January-delivering cargo translates to around $45.77/t FOB on a Panamax basis, Sxcoal calculated. That compared to offers from Indonesian miners for the same grade at around $47-47.5/t FOB.

Freight rate from Indonesia to China remained on a downward trajectory, with Panamax rate reportedly easing to $5.5-6/t, down by 15-20% from the start of December. This, coupled with the recent appreciation of the RMB against the dollar, slightly eased import costs. However, uncertainties regarding Indonesian coal export duties and demand in January still left most traders in a cautious stance.

Demand for high-CV Australian 5,500 Kcal/kg NAR coal remained scarce. Traders reported offers at around 720-730 yuan/t CFR China with VAT, with a slightly narrowed pace of decline. FOB offers hovered around $74/t.