After Chinese government setting a price ceiling of 750 yuan/t FOB for the 5,500 Kcal/kg NAR thermal coal at northern ports from February 5, traders waited for few days and finally began stepping up coal shipment and sales, leading to prices edging down at the ports.
According to Fewwei assessment, trading prices for the 0.8% sulphur 5,500 kcal/kg NAR thermal coal lost strengthen to 749 yuan/t FOB Qinhuangdao on Feb 8, and further down to 747 yuan/t on Feb 9, after standing still at 750 yuan/t for three days.
The nearly two-month-long red-hot market seems to cool down soon with the coming of Lunar New Year holiday that starts from Feb 15.
Large coal mines and major production provinces recently pledged to keep all-out efforts to boost output and cooperate with rail and seaborne transport departments to ensure enough supply of long-term contracts during the holiday.
Mi Shuhua, vice general manager of the newly-merged coal giant China Energy Investment Corp, said on Feb 5 that all mines in the group will run fully during the holiday, urging subsidiaries to treat this as "a political mission".
Other state groups like Datong Coal Mine Group and China National Coal Group, and the country's largest private miner Inner Mongolia Yitai Group will also prioritize long-term contract coal supply to power plants in urgent need of the fuel.
In Ordos, Inner Mongolia, coal prices also started going down at some coal mines that enjoyed rapid price growth earlier. Large mines there raised rail shipment these days.
With the Spring Festival just around the corner, some traders have gone for holiday at northern ports. The rest are accelerating clearing out stocks, leading to increased spot supply in the market.
A trader in Zhejiang reported the 5,500 Kcal/kg NAR coal from Inner Mongolia was offered a bit lower at 748 yuan/t FOB Qinhuangdao.
With temperature picking up and industrial electricity use going down ahead of the holiday, coal burn is falling gradually at utilities.
By Feb 11, daily coal burn totaled 654,000 tonnes at coastal power plants under the six major generators, decreasing straightly for over a week from the recent high of 857,000 tonnes on Feb 2.
Combined coal stocks of these power plants stood at 8.52 million tonnes on the day, hardly changing from 8.67 million tonnes at the month's beginning. The stocks were able to cover 13.02 days on average, up from 10.36 days on Feb 2.
Coking coal prices remained solid these days. As the holiday nears, mines that mainly produce coking coal are gradually going for holiday in northern production bases.
Supply of low-sulfur primary resources continued to shrink in Shanxi, and blending coking coal cargoes reduced in Yuyang, Shaanxi. Coking plants, still with high operating rates right now, showed large appetite for the cokemaking material.
Rail transport tightness and the suspension of some truck routes also supported the market. Coking coal prices are expected to keep stable over the last week before the holiday.
(Writing by Alex Guo Editing by Harry Huo)
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