Thermal coal market sentiment slightly improved at China's northern transfer ports, with inventories dropping further and downstream inquiries picking up modestly. Certain cost-effective lower-CV grades witnessed improved procurement, driving prices above the benchmark index.

Coal inventories at major Bohai-rim ports have been on a downward trajectory for four consecutive days, providing some relief to a market grappling with oversupply earlier in the month. Sxcoal's data showed that the combined stocks at Qinhuangdao, Caofeidian, Jingtang, and Huanghua ports totaled 28.47 million tonnes on December 30, marking a 5.7% decline from the recent high on December 22.

Rail coal inflows via the Daqin line, a major artery delivering coal from major production areas to northern ports, have recently averaged around 1 million tonnes daily, down from over 1.3 million tonnes at the start of December. Meanwhile, the average number of vessels anchored at the ports increased to 76 during December 24-30, up from 66 earlier in the month, according to Sxcoal's data.

The tonnage-adjusted stock-to-fleet ratio, a key indicator of on-site supply, fell to 0.74 on the same day, down from a peak of 0.92 a week prior, according to assessments by Sxcoal, signaling easing of supply surplus. However, the ratio remained above the six-month rolling 80th percentile of 0.63, suggesting lingering pressure on prices.

Coming along with the inventory move was improved demand, with some end users showing increased interest in inquiries, particularly for lower-CV 4,500 Kcal/kg NAR grade, which has became competitive following sharp falls.

Traders were increasingly reluctant to sell, with some hoarding stocks and halting offers in anticipation of price gains. Regional rebounds in mine-mouth prices and a leading mining group's 5 yuan/t increase in its latest port selling prices for third-party coal starting December 30 also boosted market sentiment.

Offer prices reflected tentative firmness. Cargoes of 4,500 Kcal/kg NAR were heard offered at 490-500 yuan/t FOB northern ports with VAT, with some low-sulfur and low-moisture resources available at up to 10 yuan/t premiums to the CCI 4500.

Offers of 5,000 Kcal/kg NAR coal centered around 585-590 yuan/t, while 5,500 Kcal/kg NAR grade at 680-710 yuan/t, depending on key quality indicators. Traders reported reduced availability for premium 5,000 Kcal/kg NAR cargoes at discounts to the CCI 5000 index.

On December 30, the CCI Index for 5,500 Kcal/kg NAR coal traded at Qinhuangdao port stood at 680 yuan/t FOB with VAT, unchanged day on day. The Indexes for 5,000 Kcal/kg and 4,500 Kcal/kg NAR coal were 588 yuan/t and 493 yuan/t, rising 2 yuan/t and 3 yuan/t respectively.

However, the overall sentiment leaned toward short-term stability rather than a sharp rebound. Despite the uptick in inquiries, transactions remained sparse with a lack of robust recovery of consumption at power plants, despite falling temperatures. Power plants' coal consumption edged higher slowly, but inventories stayed relatively ample, limiting their spot coal procurement.

"The current price movement appears to be an oversold rebound and could be hard to rise significantly," said one Inner Mongolia-based trader source.

With no fundamental improvement expected in January and persistently low power plant loads, many participants anticipated prices to plateau before potentially declining again.

Import market in stalemate

Imported thermal coal prices exhibited resilience, bolstered by tight Indonesian supplies and firmer offers. The lowest offers for the most-popular 3,800 Kcal/kg NAR coal was at $2-3/t premiums to the two-week benchmark indexes. Certain cargoes offered at fixed prices reached $49-50/t FOB on a Panamax basis for late January and early February delivery, sources said.

A trader source in South China disclosed "it might be challenging to secure 3,800 Kcal/kg NAR coal at $48/t FOB". Some traders winning utility tenders at low prices might face pressure to secure cargoes at a profit, a second trader source added.

Apart from firm offers, rebounding seaborne freight rates added to the delivered costs, prompting traders to raise their bidding prices to utility tenders. The Panamax freight rate from South Kalimantan to South China rose by around $0.5-1/t week on week to around $5.5/t, sources confirmed.

Meanwhile, the earlier sharp decline in domestic comparables also diverted part of the demand inward, denting the buying appetite for seaborne low-CV grades.

The Indonesian government has yet to finalize the detailed mechanism for coal export duty, despite plans to implement it from January 2026. However, it was learned that the HBA will be used as one of the bases for determining the export reference price, which will later serve as the basis for calculating the coal export duty, based on a regulation from the Ministry of Trade.

High-CV Australian 5,500 Kcal/kg NAR coal was offered at around $72/t FOB and 680 yuan/t or so CFR South China with VAT, with individual buying indication heard at about 670 yuan/t. Freight rate from Australia to South China also dropped, with Panamax freight rate at $10-11/t and Capesize rate $13/t.

On December 30, the CCI Index for Indonesian 3,800 Kcal/kg NAR coal rebounded by $0.3/t from a day earlier to $45.3/t FOB, while the index for Australian 5,500 Kcal/kg NAR coal remined unchanged at $84.5/t CFR.