China spot thermal coal prices pick up at N. ports, sign of market upturn

2017-12-01 11:12:00 Viewpoint,  Price

China's thermal coal spot market posted a noticeable pickup at northern ports in recent days, supported mainly by tight supply from production areas amid inadequate rail wagons.

After keeping steady around 670 yuan/t for eight days in mid-November, domestic 5,500 Kcal/kg NAR coal has rebounded since November 23, hitting 683 yuan/t FOB on November 29, up 12 yuan/t or 1.79% from a week ago, showed the Fenwei CCI Thermal index.

For the 5,000 Kcal/kg NAR coal, the CCI index was growing more sharply than the CCI 5500 index. From 582 yuan/t on November 22, the trend kept going up almost without any zigzags. On November 29, it came at 605 yuan/t, very close to the monthly high of 606 yuan/t on November 1.

A Hebei-based market player attributed the increase of the 5,000 Kcal/kg NAR coal to tight rail transport. "Railway freight has been on the verge of full load operation since diesel trucks were banned," he said. "Wagon application and approval are not so available now."

Although the prices are still below high levels in October, they still took many traders by surprise.

A trader from Qinhuangdao port described the pickup as a "shocking squirt". "I think the market may head down again following this short boom," he said.

Coal burns at thermal plants increased recently as cold wind blanketing most northern regions and hydropower failed to fill the demand gap due to low water levels.

Daily coal consumption averaged 645,400 tonnes at the six major coastal power enterprises over November 19-25, 40,300 tonnes or 6.66% more than the average a week ago.

On November 30, daily coal consumption totaled 646,000 tonnes at the six major coastal power enterprises, up 24.23% from the beginning of the month.

However, coal prices were still on the downtrend at major production areas. In the past week, the three large coal provinces – Shanxi, Shaanxi and Inner Mongolia – posted price declines of various extents.

Yulin, one of Shaanxi's major coal cities, saw a large price slump on weak demand. Some miners lowered prices in northern Shanxi while most remained the same. Prices continued in a downside at Ordos, Inner Mongolia.

Mine-mouth prices are likely to benefit from the uptrend at northern ports soon. Miners in Ordos reported more coal trucks and fewer stocks in recent days.

In the short run, spot coal prices are expected to keep strength at northern ports. But, the upward strength may weaken gradually, given a lack of firm demand from utilities that are relying mainly on term contracts.  

Analyst with Everbright Securities said it was mainly increasing residential power demand for heating purpose (like air conditioners and electric radiators) that drove up coastal coal prices.

Increased coal and power usage in southern regions caused by tight supply from the north also helped prices bounce back more steeply than expected, the analyst said in a note.

BOCI Securities pointed out in its latest research that the month with worst supply-demand strength is passing away. Utilities' daily consumption, according to data of the past five years, is usually 10% higher on average in December than in November.

"Demand growth is still expected to surpass supply growth in December, even as sufficient supply is guaranteed by the authorities," the research said.

In the just concluded coal trade fair, term contracts totaling over 130 million tonnes were signed between China's large coal and power enterprises. Sources said large coal miners' long-term contracts sales will rise from 2017's 80% to 90% of their total sales in 2018.

"With stricter supervision and higher contract fulfillment, power plants will be more reliant on long-term contracts," said Kaiyuan Securities. "Coal prices accordingly will move closer to a level acceptable to both parties."

(Writing by Alex Guo   Editing by Harry Huo)
For any questions, please contact us by or +86-351-7219322.

Editors Recommendations

1 China thermal coal prices still in the uptrend; Jan market may wane 2017-12-18

Thermal coal prices continued to edge up at northern China ports, sustaining an uptrend that has lasted for more than three weeks, though the market may weaken in January with authorities expected to

2 A snowfall cools down emerging price rise at N. China coal production bases 2017-12-18

A widespread snowfall recently not only blanked northern China in white, but also cooled down coal miners' enthusiasm for raising prices of slack coals. Market sources reported some miner

3 Inner Mongolia power output up 11.44% YoY in Jan-Nov 2017-12-18

Utilities with capacity of 60 GW and above generated a total 401.99 TWh of electricity in northern China's Inner Mongolia autonomous region from January to November, up 11.44% from a year ago, data sh

4 Fujian Jiangyin port coal imports up 17% on yr in Jan-Oct 2017-12-18

Jiangyin port, one emerging key part of Fuzhou port in Southeastern China's Fujian province, imported 1.89 million tonnes of coal in the first ten months, up 17% from a year ago, said Fujian Inspectio

5 Sichuan Coal sheds 3.36 Mtpa coal capacity 2017-12-18

Sichuan Coal Industry Group, one major coal firm in southwest China, has eliminated 3.36 Mtpa backward coal capacity so far this year through closure of four mines and capacity reduction of one mine,

6 China anthracite coal price edges up in early Dec, NBS 2017-12-18

Market price of washed mid-lump anthracite in China rose 0.4% from the previous ten-day period to 1,130.3 yuan/t in early December, showed date from the National Bureau of Statistics. Mea

7 Jincheng Anthracite to buy industrial gases from Air Products 2017-12-18

Shanxi Jinmei Huayu Coal Chemical Co., Ltd, one subsidiary of Jincheng Anthracite Mining Group, has signed an agreement with world-leading industrial gases company Air Products, in a bid to get supply

8 China unveils 2017-21 plan for clean winter heating 2017-12-18

China will shift northern Chinese cities to clean heating during the winter by 2021, according to a statement jointly issued by ten government authorities. The government has made "concre

9 Weekly global coal market news summary (Dec 11-Dec 15) 2017-12-15

India government favors petcoke import ban, U.S. would be biggest loser India's government is in favor of banning imports of petroleum coke on environmental grounds, according to a government

10 Seaborne thermal coal prices rally to five-week high 2017-12-15

Prices of seaborne thermal coal selling into China have risen to the highest in about five weeks, boosted by a flurry of enquiries from Chinese buyers. Offer prices for Indonesian 3,800 K

Most Read Articles

1 China's anti-pollution efforts get a reality check 2017-12-11

China's efforts to tackle air pollution are getting a reality check, with some regions told to revert to burning coal after shortages of natural gas left people without heating amid freezing winter te

2 Chinese coal giants lift monthly contract price for Dec 2017-12-12

Chinese major coal firms adjusted up monthly contract prices for December by 11.4%, sending upside signals to the market, sources said. It came as these conglomerates were upbeat ab

3 AIIB loans Beijing $250 mln on "coal-to-gas" 2017-12-11

Asian Infrastructure Investment Bank (AIIB) approved a loan of $250 million to Beijing in constructing natural gas transmission pipeline network with coverage of nearly 510 villages with 0.22 million

4 China urges coal firms to release advanced capacity to offset gas shortages 2017-12-15

China's National Energy Administration pressed coal firms to properly release some advanced coal capacity to ensure winter heating for millions of households in northern areas, said the authority in a

5 Indonesian coal prices run up on increased trades 2017-12-11

Increased buying interest pushed Indonesian thermal coal prices higher in the seaborne market; Indian buyers showed great appetite and southern Chinese utilities maintained purchase for the fuel.

6 India government favors petcoke import ban, U.S. would be biggest loser 2017-12-12

India's government is in favor of banning imports of petroleum coke on environmental grounds, according to a government affidavit filed with the country's top court, which could be a big blow to U.S.

7 China Nov raw coal output down 2.7% YoY, NBS 2017-12-14

China's above-sized enterprises (whose annual major business revenue reaches over 20 million yuan) mined 299.98 million tonnes of raw coal in November, a decrease of 2.7% year on year, showed data

8 South Korea may only switch one planned coal power plant to gas 2017-12-11

Only one of South Korea's planned coal power plants is likely to be converted to gas, the country's energy minister said on November 8, despite government efforts to switch four out of nine coal plant

9 Inner Mongolia Nov coal prices dip MoM 2017-12-11

Mine-mouth prices of thermal coal dipped in China's coal-rich Inner Mongolia in November, as supply increased with release of more advanced capacity. The average mine-mouth se

10 Clean energy to exceed coal in China's power generation 2017-12-11

Clean energy, including nuclear power and renewable energy, is expected to exceed coal in China's electricity generating capacity in about ten years, a senior official has said. China's i