China's coal giants Shenhua Group and China National Coal Group reduced prices of seaborne thermal coal for February loading by 7-20 yuan/t, according to market sources.
The two groups were said to offer 5,500 Kcal/kg NAR coal at 569 yuan/t including VAT for customers with annual contracts, down 7 yuan/t month on month; while the same material is offered at 610 yuan/t for those with monthly contracts, down 20 yuan/t from January.
China's thermal coal prices may face further downturn as production resumes at mines after the Spring Festival holidays.
One domestic trader said current price of 5,500 Kcal/kg NAR coal with 0.8% sulphur stood at 590 yuan/t with VAT, FOB basis, while traders were still inactive to purchase. He predicted the domestic coastal coal market to go down and prices to drop, adding activeness of the market may improve after the Lantern Festival on February 11.
One trader at producing base expected coal prices at ports to further fall slowly in the near term, given sliding coal prices at production areas.
Mongolian 5,500 Kcal/kg NAR coal was concluded at 600 yuan/t recently, inclusive of VAT, on FOB basis; that with 0.8% sulphur was offered at 595 yuan/t, and 5,000 Kcal/kg NAR coal at 535 yuan/t, according to the second trader.
On February 9, the Fenwei CCI Thermal Index assessed domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port at 592 yuan/t FOB with 17% VAT, falling 6 yuan/t from post-holiday February 3 and 15 yuan/t from a month ago.
On the same day, the price of domestic 5,000 Kcal/kg NAR coal was assessed at 530 yuan/t, FOB basis with 17% VAT, down 6 yuan/t from February 3 and 10 yuan/t month on month.
Meanwhile, stockpiles dropped notably at ports due to the Spring Festival holidays. As of February 9, coal stocks at Qinhuangdao port fell 760,000 tonnes or 12.82% from the beginning of the month to 5.17 million tonnes.
By contrast, power plants had relatively high coal inventory and were not willing to restock after the seven-day holiday. This may get worse with the approaching of slack season of coal consumption during which daily consumption could be limited.
On February 9, coal stocks at China's six key power plants totaled 11.9 million tonnes, a rise of 986,000 tonnes from the beginning of February; their daily consumption averaged 462,000 tonnes, rising 35,000 tonnes from eight days ago.
At coal producing bases including Inner Mongolia and Shaanxi, coal transport was interrupted by heavy snow these days, which impacted on outbound coal sales.
Most coal miners held coal prices firm at the pre-holiday level in Mongolia, with some producers adjusting down prices slightly.
In Shaanxi's Yulin city, large miners reduced coal prices at Yuyang district after the holiday, indicating miners' bearish sentiment about the near future market; while coal producers expected coal prices to remain stable as a whole with small drops at Shenmu district.
(Writing by Evie Feng Editing by Jessie Jia)
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