Thermal coal market showed no signs of improving at China's main production hubs on June 5, as prices slumped another 50-100 yuan/t at some mines.

The increasing stockpiles are the knotty problem facing miners. Most of them admitted they made every effort to avoid inventory build-ups, yet consequently can only lower offer prices to ease inventory.

Coal production at some mines was already being interrupted by nearly full storage, and several mines have no choice but to scale down or halt production.

"We have suspended production for one week because of underground issue. Suppose we produce normally, our stockpiles would already be full a long time ago," said one coal miner based in Shenmu of Shaanxi.

The miner reported a 50-yuan/t price cut for 6,000 Kcal/kg NAR slack coal with 0.2% sulfur to 645 yuan/t. Cargoes of 30-80mm, 6,500 Kcal/kg NAR lump coal were slashed by 190 yuan/t to 800 yuan/t.

On June 5, all 20 mines surveyed by Sxcoal revised down their offer prices, generally down 20-140 yuan/t.

The daily assessment by Sxcoal also demonstrated the steep price downturn, with Yulin 6,200 Kcal/kg NAR and Ordos 5,500 Kcal/kg NAR coal prices down respectively 55 yuan/t and 52 yuan/t on June 5, falling to 672 yuan/t and 550 yuan/t, both on mine-mouth basis with VAT.

The situation at mine-mouth market was quite contradictory. Coal miners, on the one hand, tried to attract more buyers by cutting prices. But this, in return, fueled end buyers' wait-and-see sentiment, since they worried prices may drop further, which means larger losses for them.

One coal company in Ejin Horo banner lowered prices of 5,600 Kcal/kg NAR washed thermal coal by another 40 yuan/t to 540 yuan/t after the previous decline a day ago, aiming to lure more chemical plants, the remaining buyers for now.

In the auction market in Shanxi, 60,000 tonnes of 5,000 Kcal/kg NAR washed coal with 0.6%-sulfur were put on auction at 470 yuan/t and traded averagely at 507 yuan/t, down 23 yuan/t from last session.

But optimistic news were heard also after coal prices at northern ports stabilized with fresh new demand from utilities in the south, where scorching temperature has boosted aid-conditioning usage.

This led to mild price pickups at some mining hubs. One Shuozhou-based trader offered thermal coal (CV 5,500, S 1.5%) 10 yuan/t higher to 530 yuan/t.