China's benchmark thermal coal prices slump below 1,300 yuan/t at N ports Price,  Ports,  Thermal Coal 2022-11-24 14:40:04

China's 5,500 Kcal/kg NAR thermal coal prices slumped below 1,300 yuan/t FOB northern ports on November 23, as traders started dumping cargoes as panic sentiment was growing alongside sharper price drops at production areas.

Actually, inquiries increased but few translated into deals as utilities demanded deeper price cuts, while other non-power buyers also had weak appetite. Cement plants made inquiries, but their first choice was Russian coal.

On November 23, cargoes of 5,500 Kcal/kg NAR thermal coal were mainly offered at 1,320-1,350 yuan/t FOB with VAT at northern ports; 5,000 Kcal/kg NAR offer prices stood at 1,130-1,140 yuan/t, and 4,500 Kcal/kg prices were at 960-970 yuan/t.

So far, low-CV thermal coal prices have declined to the government-set caps, and traders expected further drops for mid- and high-CV coal, with price spread further narrowing.

Fast price declines have caused huge losses for traders, and some of them became reluctant to give offers as the current prices have been about 200 yuan/t lower than their purchasing prices, one trader noted.

Overall, traders' selling intentions are faltering with fewer offers in the market amid thick wait-and-see sentiment, although some undercutting activities were seen recently.

But coal stocks at northern ports continued to accumulate with the recovery of railway transport capacity. Up to now, the total inventory of the nine ports in Bohai Bay has reached 21.4 million tonnes, an increase of 270,000 tonnes over the previous day and a year-on-year decrease of 2.77 million tonnes.

Market participants generally predicted offer prices of mid- and high-CV coal are highly likely to drop to the required levels, impacted by poor demand, the continuous price declines at coal mining heartlands and coal giant's slumped buying prices for outsourced coal.

October 26 marked a turning point for coal prices to start softening from previous bullishness. So far, the 4,500 Kcal/kg NAR coal has decreased by 270 yuan/t; 5,000 Kcal/kg and 5500 Kcal/kg decreased by nearly 350 yuan/t.

At first, the decrease was basically kept within 10 yuan/t, which was mainly stable on the whole. Since November 9, the decline has quickened to nearly 20 yuan/t at one time. In this week, price decline gathered pace further, reaching the highest since this year on November 23 and some cuts exceeding 40 yuan/t.

Even the high-quality Shanxi coal with low-moisture and low-sulfur, which is still relatively scarce at ports, was also in the downward movement.

In the following period, coal consumption at power utilities is expected to rise with falling temperature at end-November and early-December. However, the low industrial power usage will suppress overall power consumption to some extent.

The bearish sentiment thickened with inventory buildups at ports and high-enough power coal stocks at utilities. Some forecasted 5,500 Kcal/kg coal will not only drop to the mandated level, but below 1,000 yuan/t.

(Writing by Rebecca Liu  Editing by Tammy Yang)
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