Chinese domestic thermal coal prices may have limited uptick space in early July, as downstream buyers have sufficient stocks at present and are less likely to release much buying interest until consumption has a material leap in the peak demand period.
The recent price increase, starting early this week, was primarily driven by Shenhua's price adjustment. The group raised July term contract prices by 6-33 yuan/t compared with last month, stoking bullish sentiment across the market.
The latest CCI index for 5,500 Kcal/kg NAR spot coal stood at 583 yuan/t FOB with VAT, a 7 yuan/t rise from a day ago, adding the total rise to 13 yuan/t from 570 yuan/t that kept stable for two weeks.
However, market analysts doubted the strength of the increase as many downstream buyers are still sitting on the sidelines. When the market fervor ebbs away, the market could probably fall back to a flat line again.
Entering July, the number of vessels anchoring off Qinhuangdao port declined to 23, while Caofeidian and Jingtang ports only saw single-digit number in vessel queue. Huanghua port, which had nearly 50 vessels anchoring at present, only saw active handling activities on long-term supply.
The latest data for 504 key power plants across the country showed their coal stocks totaled 83.96 million tonnes, which could support 22 days of burning. As of July 2, coal stocks of the six coastal power groups totaled 16.3 million tonnes, enough to cover 26 days of use.
Analysts expected the level of daily coal consumption to keep largely unchanged until the end of the monsoon season.
Since June, rainfall in the central and southern provinces has been obviously more than the same period in the past few years. Precipitation generally more than doubled the level in June 2019. Over the next four or five days, heavy rainfall will continue to hit these areas, weather forecast said.
(Writing by Alex Guo Editing by Tammy Yang)
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