China's domestic thermal coal market exhibited marginal cautious optimism in the last trading day of the week. Traders reported increased inquiries and growing resistance to low-price sales at major Bohai-rim ports, yet the underlying demand weakness left any stabilization fragile.

With prices of some spot thermal coal cargoes falling below long-term contract levels, some major mining groups started to worry about a potential pullback of contract coal shipments from end users, a move that could further exacerbate inventory pressure at northern ports.

Rumors said a state-owned comany is probably delaying some January-delivery import coal purchases, injecting positive sentiment to the market. This, if true, could aim to clear high port inventories of domestic coal and avoid demurrage fees, said a Fujian-based trader source.

Another trader source considered the shift, if any, as inventory management at the enterprise level, rather than a broad import suspension. "It nonetheless provides short-term psychological support," the source said.

One Hebei-based trader source offered 0.6%-sulfur 5,000 Kcal/kg NAR coal at 620 yuan/t FOB with VAT northern ports, while a buyer counteroffer was heard at 610 yuan/t for immediate delivery.

Lower offers were also heard, but sellers were generally unwilling to offload stocks below the psychological supporting level of 600 yuan/t, Sxcoal understood.

Some sellers also pinned hopes on signs of stabilization in production areas, as well as the prospect of a year-end supply reduction as miners hit their annual targets.

However, participants remained guarded. "Price decline will narrow further, but a rebound is seen tentatively as elusive," said a second Hebei-based miner source. He confirmed that transactions remained inactive, with most occurring below benchmark indexes, adding buyers still insisted on pressing buy prices.

Broader fundamentals remained unfavorable to prices. Portside and power plant coal inventories stayed elevated, while consumption at power plants was still moderate amid mild weather. Non-power sector users only made need-based purchases, diminishing chances of any meaningful rebound in the near future.

On December 19, the CCI Index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port stood at 716 yuan/t FOB with VAT, falling 8 yuan/t day on day and marking a fourth straight week of decline. The Indexes for 5,000 Kcal/kg and 4,500 Kcal/kg NAR coal were 614 yuan/t and 514 yuan/t, respectively, both down 8 yuan/t from a day earlier.

Inventories kept building up at northern ports this week, albeit at a slower pace compared to a week earlier. Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports collectively held 29.65 million tonnes of coal on December 19, Sxcoal's data showed, exceeding the month-ago and the year-ago levels by 16.9% and 7.7% respectively.

The tonnage-adjusted stock-to-fleet ratio, a major indicator for activity at northern ports, stood at 0.89 on December 19, rising fast from a short-lived retreat in the first half of last week and exceeding the six-month rolling 80th percentile by 43.4%, suggesting a relatively loose supply. Prices are typically on a downward spiral when the ratio exceeds the 80th percentile threshold, Sxcoal data showed.

Coal burns at power plants showed limited signs of improvement. Consumption at China's inland power plants totaled 3.96 million tonnes on December 17, down by nearly 8% from a year ago, though rebounding 17.1% month on month due to seasonal temperature shift.

The import coal market witnessed a lack of transactions, though traders' bidding prices to domestic major utility tenders fell at a slower rate. 

Traders anticipate Indonesia's planned 1-5% export duties starting next year could push up low-CV coal import costs. Resilient offers from Indonesian miners amid unfavorable weather and pending RKAB mining quota approval also discouraged traders from further cutting prices despite subdued utility appetite.

January-delivery Indonesian 3,800 Kcal/kg NAR coal was heard at about $48.5/t FOB on Panamax basis, while 4,700 Kcal/kg NAR coal at $65/t or so. The Panamax freight rate from South Kalimantan to South China was estimated at $5.5/t, down from over $8/t at the start of the month.

Australian 5,500 Kcal/kg NAR coal was heard offered at around $75/t FOB, with some lower-priced cargoes heard from traders to cash out. 

On December 19, the CCI Index for Indonesian 3,800 Kcal/kg NAR coal stayed unchanged day on day at $44.5/t FOB, while the index for Australian 5,500 Kcal/kg NAR coal fell $0.3/t to $89.7/t CFR.