While China's thermal coal price picked up from mid-April, spurred mainly by restrictions on coal import at some eastern and southern ports, it remained lack of strength to go up further, according to the latest report Fenwei Coal Weekly Update released by coal consultant Fenwei Energy Information Services.
Fenwei CCI spot index for the 5,500 Kcal/kg NAR thermal coal rebounded from 569 yuan/t on April 16 to 597 yuan/t on April 25, but decreased to 594 yuan/t a day later and kept stable in the rest of the month.
Starting from April 1, China adjusted down power price by 10% for general commercial and industrial sectors to lighten their burden. Fast-growing coal price apparently came against the big picture.
Market sources said the National Development and Reform Commission held a meeting with officials of local coal departments of Shanxi, Shaanxi and Inner Mongolia as well as leaders of major coal enterprises and ports on April 28, saying it would't intervene in coal price but hoped "it came back to reasonable range as soon as possible".
Fenwei analysts analyzed although there were signs that price rise started spreading to production bases from ports, major end users – coastal power plants – were yet to make any purchase moves beyond what was absolutely necessary to sustain operations.
Fenwei monitoring data showed stocks decreased 81,000 tonnes to 1.12 million tonnes last week at 53 surveyed coal mines across the country, indicating sales increased slightly from a week ago.
But capacity utilization rates at surveyed mines in Shanxi and Shaanxi averaged 107% last week, down 9.2 percentage points on the week. It seemed that miners were still wary about the market, with caution in production.
Currently, coal consumption at coastal power plants remained as stable as 650,000-700,000 tonnes, almost unchanged since late March. By May 2, daily consumption of the six major coastal utilities totaled 657,000 tonnes, lagging behind 703,000 tonnes on April 28.
The combined stocks decreased to 19 days in late April but came in at 20 days again on May 1 and 2, a rather high level that was enough to hold back purchase.
Stocks at ports decreased last week. By April 27, the four major northern ports – Qinhuangdao, Jingtang, SDIC Caofeidian and Huanghua – saw their combined stockpiles total 15.36 million tonnes, slightly easing from 15.31 million tonnes a week ago; stocks at Guangzhou port down 0.16 million to 2.18 million tonnes.
However, the five major ports along the Yangtze River, more close to the southern and eastern consuming regions, increased 0.12 million to 3.81 million tonnes. The figure may explain further that coastal utilities were yet to crank up large purchase. Stock that declined at northern ports seemed flow more to traders rather than end users.
Sales of thermal coal have recently encountered resistance at ports along the Yangtze River and traders there accelerated shipments by offering discounts.
In general, sentiment may not be a persistent force to drive the market further and hydropower, though still weak at present, is gradually increasing and will dent coal consumption in the future.
For coking coal market, the spot price was still under pressure as supply-demand fundamentals remain weak.
According to Fenwei monitoring data, capacity utilization averaged 74.9% at surveyed coking plants last week, down 0.1 percentage point on the week; raw coal stocks increased 274,000 tonnes to 3.9 million tonnes at surveyed mines.
Poor sales and high stocks limited production, with raw coal output down 18,000 tonnes to 6.8 million tonnes at the surveyed mines; capacity utilization averaged 116%, dipping 0.3 percentage point.
By May 2, Fenwei CCI Liulin low-sulfur and
high-sulfur indexes were assessed at 1,580 yuan/t, both on ex-plant basis with
VAT, flat week on week.
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(Writing by Alex Guo Editing by Harry Huo)
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