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China's portside thermal coal prices fall despite supply tightness
Non Coking
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31 Oct 2022, 14:43 IST
Steel Mint Insights

China's thermal coal prices continued to lose ground with offers down by 10-20 yuan/t at northern transfer ports amid the lackluster demand, although worries about epidemic-linked supply shortage haven't dissipated.

On October 28, offer prices for the benchmark 5,500 Kcal/kg NAR thermal coal stood around 1,600 yuan/t FOB with VAT at northern ports, down from 1,600-1,620 yuan/t a day ago; 5,000 Kcal/kg NAR coal was mainly offered at 1,400 yuan/t FOB.

The 5,500 Kcal/kg NAR offers were expected to head lower next week as the demand showed no signs of recovering, traders said, adding some of them tried to boost buying interest by cutting prices to 1,580 yuan/t, but failed.

With low buying interest, the trading liquidity remained thin, making offer prices "less meaningful to gauge the market" as some traders said.

"More offers have started emerging since yesterday (October 27), especially for Inner Mongolia coal," said a Fujian-based trader. "This means traders begin to be bearish and want to lock profits."

A Zhejiang-based trader also said he had received a lot of offers, but few of them met buying interest. The trader attributed the poor demand to sufficient stocks at power plants. "Even small power plants in our place have inventories of more than 20 days of use."

The trader tried to lock a 5,500 Kcal/kg NAR cargo at 1,580 yuan/t for early November delivery, but no buyers were interested in the price.

"Traders are trying to escape," said a utility source based in Guangdong. He heard some traders agreed to trade at 1,400-1,410 yuan/t for some 5,000 Kcal/kg NAR cargoes, which were still offered at 1,420-1,450 yuan/t two days ago.

"The epidemic is not only affecting the upstream but also the downstream sectors," he said. "We previously expected the demand to recover somehow after the party congress, but there are still no signs by far."

Two cargoes of 4,500 Kcal/kg NAR with 1% sulfur were offered at 1,175 yuan/t FOB, he added.

Poor supply amid epidemic

Coal supply was still subject to strict COVID-19 restrictions with rail inflows staying low. On October 27, railings towards the three northern China ports (Qinhuangdao, Jingtang and Caofeidian) were 600,000 tonnes, flat from a day earlier. This compares with 1.1-1.5 million tonnes before the outbreak at a station of Daqin line.

Market sources reported a number of scheduled cargoes were delayed or cancelled from stations to ports by Daqin line. The key coal-haulage artery has been in a shortage of crew members as many were quarantined as increasing new infectious cases were tested. The authorities are working to make up from other lines.

Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal


31 Oct 2022, 14:43 IST



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