Thermal coal prices started gaining strength at China's major production areas along with increased demand, according to the latest survey by leading energy consultant Fenwei Energy, operator of industry portal sxcoal.com.
While the pace of price rise at mines was lagging behind that at ports, most miners were yet to adjust their selling prices, it indicated prices in production areas may further move up in the short run.
Price of washed coal edged up in northern Shanxi province recently. Local coal miners reported good sales and significant decrease in stocks. Coal prices were flat or still in downside in the central and southern parts of the province.
On May 7, Fenwei assessment showed the price of Datong weak-caking coal with 5,500 Kcal/kg NAR and 0.8% sulfur stood at 410 yuan/t on mine-mouth basis with VAT, up 10 yuan/t from a week ago; that of 4,800 Kcal/kg NAR thermal coal with 1.0% sulfur produced in Shuozhou was 370 yuan/t, free-on-rail with VAT, up 10 yuan/t on the week.
Prices in Luliang, Linfen, Jingzhong, Changzhi and Jincheng, all located in central and southern Shanxi, dropped 30-40 yuan/t for various brands on the same day, data showed.
Sales in Ordos, Inner Mongolia improved with more trucks waiting at mines for loading. Prices of some local brands increased but most remained unchanged. Miners were mulling over price hike in anticipation of good demand.
In Yulin, Shaanxi province, coal prices were moving up on the back of good sales. By May 7, the 5,800 Kcal/kg NAR thermal coal in Yulin was assessed at 395 yuan/t, mine-mouth basis with VAT, 8 yuan/t more than a week ago.
In the latest China Thermal Coal Production, Sales and Inventory Dynamic Monitor (Apr 16-30), which is issued twice a month, thermal coal prices showed mixed trends at 66 surveyed mines. There were 31 coal mines surveyed that lowered their prices, with an average of 17 yuan/t; three mines in Shaanxi and Inner Mongolia adjusted up prices by 20 yuan/t on average.
The following is an overview of changes in production areas from a variety of perspectives.
Inventory Coal mines' stocks kept falling due to traders' efforts to increase hoarding. Sentiments at mines improved, driven by recent price rally at ports. Stocks totaled 2.53 million tonnes at 66 surveyed mines during the week, down 265,000 tonnes from two weeks ago. This was the first drop after rising for three consecutive sessions in a row.
Production and capacity utilization Production edged down during the second half of April. Capacity utilization was slightly impacted in Shanxi and Inner Mongolia by inspections on mines standardization upgrading and other routine environmental checks.
Shaanxi saw production decrease by 1.43% during the period, but average capacity utilization increased slightly. Local miners acted more positively in production as demand rebounded and profit margin regained.
Profit Selling price continued to move down and slightly lowered miners' profit margin, with average profit down 6 yuan/t at surveyed mines in the period.
Sales Sales improved over the half-month period. 19 coal miners reported good sales, a far cry from only one in the first half; the number of mines that reported bad sales decreased 16 to four.
Fenwei Energy picked 66 representative thermal coal mines as monitoring sites in Shanxi, Shaanxi and Inner Mongolia, with capacity combined at 400 Mtpa. There are 21 mines in Shanxi with capacity at 110 Mtpa, 19 mines in Shaanxi at 110 Mtpa, 26 mines in Inner Mongolia at 180 Mtpa. In terms of ownership, 30 mines are state-owned, 18 local state-owned and 18 private.
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(Writing by Alex Guo Editing by Harry Huo)
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