Chinese traders sidelined following QHD port's coal price cap Price,  Thermal Coal 2018-02-06 17:11:00

Chinese traders engaged in spot thermal coal transactions were generally in a wait-and-see stance after the Qinhuangdao capped price at 750 yuan/t FOB for 5,500 Kcal/kg NAR coal traded at the port.

Market sources confirmed Qinhuangdao Port Group has decided to stop allowing 5,500 Kcal/kg NAR coal at above 750 yuan/t FOB to enter the port, the largest coal transfer hub in North China, effective February 5.

It is believed to be a harsh move taken by Chinese authorities to bring down coal prices that have rallied for long and secure supply for power producers that are in face of coal shortage this winter.

"Everybody is waiting and sounding out market conditions now," said a Tianjin-based trader. "Buyers remain keen on taking the undersupplied material regardless of the limit."

The spot coal market was still supply-strapped at Bohai-rim ports, he noted. "A trader in Caofeidian port offered 20,000 tonnes of 5,000 Kcal/kg NAR blend coal with 0.8% sulfur high at 700 yuan/t last Sunday. I also have a train of Inner Mongolian same-CV fuel offered at the same level."

A Qinhuangdao port-based trader who reported growing wait-and-see sentiment in coastal coal market said people who intended to buy previously would not take any coal now.

Regarding the price-regulating measure, the trader pointed out it's just difficult to quell jumping prices via the "visible" hand while cost has climbed quickly. "Coal prices are rising at production regions; mine-mouth price for 5,500 Kcal/kg NAR coal has climbed to 530 yuan/t."

"The spot coal market came to be muted following the price limit, and I didn't hear any low offer prices of 750 yuan/t FOB for 5,500 Kcal/kg NAR fuel," said a Fujian-based trader, adding 5,000 Kcal/kg NAR coal was still offered at 695-700 yuan/t FOB.

Yet a coal mine source said his firm had supplied 5,500 Kcal/kg NAR coal for utilities at 750 yuan/t FOB, inclusive of 17% VAT.

"Traders generally could accept the price, as it leaves some profit margins for them who purchased the material at relatively low prices," he pointed out. "It took only one week for prices to surge to 770 yuan/t from 750 yuan/t FOB, so I think their purchase cost should be low."

He noted his company would outsource coal at even lower prices, as further price-regulating moves are likely, and the financial cost and profit should also be factored in.

Barely anybody dared to offer 5,500 Kcal/kg NAR coal above 750 yuan/t FOB after the policy had come out, leading to few deals clinched and more in wait-and-see, said an Inner Mongolia-based trader.

"Major state-owned coal producers, however, seemed to have implemented the policy strictly in response to authorities' price control effort," he said, adding China National Coal Group sold the fuel to utilities at 750 yuan/t FOB.

Echoing this view, a Jiangsu-based trader said several large producers had lowered their prices while traders were generally sitting on the sidelines. Traders also turned tepid in buying the material at rail platforms given narrowed profit.

"It may be less likely for spot coal prices to edge up in the short run," said a second Inner Mongolia-based trader, citing downward price revisions by large coal firms and falling coal burns at power plants, though utilities may continue to restock before the Spring Festival.

A Hebei-based trader said offer prices for 5,500 Kcal/kg and 5,000 Kcal/kg NAR coals stayed at 775 yuan/t and 700 yuan/t FOB, and no deals were concluded following the price limit.

"Though no deals were settled at northern ports these days, some buyers will probably turn to Rugao and Yangtze River ports to take the fuel at high prices," said a Zhejiang-based trader, noting this may in turn underpin coal prices.

On February 6, the Fenwei CCI Thermal index showed domestic 5,000 Kcal/kg NAR coal slid 4 yuan/t from a day ago at 682 yuan/t FOB with VAT, which was down 4 yuan/t from the week-ago level.

(Writing by Tammy Yang  Editing by Jessie Jia)
For any questions, please contact us by or +86-351-7219322.

Share this article
Connect with us

Editors Recommendations

1 China Yangtze Power Q3 power output up 10% on yr 2018-10-18

China Yangtze Power Co., Ltd said its power generation totaled 82.79 TWh during the third quarter this year, an increase of 9.85% from the same period last year, said the company in its quarterly anno

2 China Coal Daily Track (Oct 18) 2018-10-18

Thermal coal Domestic market Production area Coal prices continued the upbeat trend in major production areas. Some miners adjusted up prices by 30-40 yuan/t at a time in the central Sha

3 Xinjiang solar power curtailments drop significantly in Sep 2018-10-18

Northwestern China's Xinjiang autonomous region saw a marked decrease in solar power waste last month, according to the regional development and reform commission. In September, Xinjiang

4 Inner Mongolia Jan-Sep power output up 13% YoY 2018-10-18

Utilities with capacity of 60 GW and above generated a total 366.4 TWh of electricity in northern China's Inner Mongolia autonomous region in January-September, up 12.92% from a year ago, showed data

5 China's thermal coal prices may further jump after CHN Energy's adjustment 2018-10-18

Major coal producers are expected to follow suit after China Energy Investment Corporation (CHN Energy) adjusted up its spot prices lately, which may further shore up thermal coal market.

6 Spot prices continue to increase in Chinese thermal coal market 2018-10-18

China's spot thermal coal prices have been moving up so far this month at northern transfer ports, given resilient pre-winter buying from power plants and bullish sentiment. Though trader

7 China's import coal traders anticipate demand rebound in Nov 2018-10-18

Lots of traders are anticipating a strong rebound of demand in November in China's thermal coal import market, as utilities' purchase may brisk up again prior to the release of next year's import quot

8 Coke stocks linger low at Chinese coking and steel plants 2018-10-18

Coke stocks hovered at relative low levels at both coking and steel plants in China, which, combined with climbing demand, helped shore up prices of the steelmaking material. The coke mar

9 CHN Energy raises spot thermal coal price again this mth 2018-10-18

China's coal conglomerate CHN Energy roared the spot market with another 23 yuan/t hike, following 18 yuan/t rise already made at the beginning of the month, sources disclosed. The

10 Shandong to boost "road-to-rail" transport of bulk commodities 2018-10-18

Shandong will boost the conversion from road to rail transport of bulk commodities, in an effort to promote its transport structural adjustment, according to provincial officials. The pro

Most Read Articles

1 Ganqimaodu Jan-Aug coking coal imports at 26.56% of China's total 2018-10-08

Ganqimaodu border crossing in China's Inner Mongolia imported 11.59 million tonnes of coking coal from the neighboring Mongolia over January-August this year, falling 1.76% from the year-ago level but

2 Continued import curbs and short supply underpin China coal prices 2018-10-11

China's port thermal coal prices were well propped up by persistently tight controls on imports alongside production constraints at mines for environmental clear-up. Relevant government d

3 China spot thermal coal prices close to 650 yuan/t; import curbs likely to remain 2018-10-09

China's thermal coal market moved steadily upward after the weeklong National Day Holiday, with many spot coal traders elbowing up offer prices, pushing up spot price of 5500 Kcal/kg NAR thermal coal

4 QHD port stocks fall to half-yr low; bullishness shines in Chinese market 2018-10-11

Coal stocks have tumbled drastically to below 5 million tonnes at northern China's Qinhuangdao port recently, paving the way for a likely coal price rise in the future. Eyeing such

5 Shanxi to cut coking capacity, coke output to cut toxic emission 2018-10-10

Shanxi province, a major coal mining hub in northern China, vowed to cut coking capacity and annual coke output, according to a government statement on October 9, in line with a long-term drive to red

6 China's QHD port remains irreplaceable to coal shipment 2018-10-11

China's Qinhuangdao port, as a barometer of thermal coal market and stabilizer of coal prices, is proven irreplaceable to coal shipment, mainly a transfer center for cargoes from production areas to c

7 China Sep coal imports decline as demand falls 2018-10-12

China imported 25.14 million tonnes of coal in September, falling 7.18% from the year prior and down 12.35% from August, showed data from the General Administration of Customs (GAC) on October 12.

8 Mongolia Sep coal exports soar 55.38% on yr 2018-10-12

Mongolia exported 3.58 million tonnes of coal in September, soaring 55.38% on the year and 20.09% on the month, data from the National Statistics Office showed. In January-September, coal

9 India's coal import rises 35% to 21.1 mln T in Sep 2018-10-08

India's coal import increased substantially by 35% to 21.1 million tonnes in September, as against 15.61 million tonnes in the corresponding month previous fiscal. The rise in imports comes at a time

10 Peabody Energy to shut parts of Queensland mine after fire 2018-10-12

Coal miner Peabody Energy said on October 11 it intends to permanently seal the area where high methane levels have been concentrated after it reported fire in parts of its North Goonyella mine in Aus