China's portside 5,500 Kcal thermal coal prices fall below 800 yuan Viewpoint,  Price,  Thermal Coal 2023-08-17 17:53:10

Persisting weak demand caused thermal coal prices to decrease further in China's portside market on August 17, with the benchmark 5,500 Kcal/kg NAR grade falling below 800 yuan/t for the first time since mid-June.


According to market sources, domestic 5,500 Kcal/kg NAR thermal coal was mainly offered at 790-810 yuan/t FOB with VAT at northern transfer ports, down from 795-825 yuan/t a day earlier. Demand for this grade, however, was tepid with few buying intentions heard from participants.


Cargoes of 5,000 Kcal/kg NAR coal were primarily quoted at 690-710 yuan/t FOB, which breached the 700-yuan/t threshold for the first time since mid-June, according to data from Sxcoal.


The downward shift prompted increased buying activity for this grade, resulting in several deals concluded in the market.  


A 5,000 Kcal/kg NAR cargo with 0.8% sulfur was traded at 700 yuan/t FOB with VAT, followed by a 1%-sulfur one done at 695 yuan/t, traders noted.


"Coal prices started diving from the afternoon of August 16, when there were already deals made at 700 yuan/t for Shanxi-originated tonnages," said a Zhejiang-based trader.


Sources noted that capital disruptions led some traders to divest their inventories, causing a crash in market sentiment.


The market was also hit by price adjustments made by the nation's top coal miner. The company reduced its buying prices for coal from other mines at Batuta railway station in Inner Mongolia. This reduction, ranging from 21 to 22 yuan/t across various coal grades, took effective from August 16.


The company announced a corresponding decrease in its selling prices for spot coal at Huanghua port. The 5,500 Kcal/kg NAR thermal coal was set at 821 yuan/t, 5,000 Kcal/kg NAR coal at 715 yuan/t, and 4,500 Kcal/kg NAR coal at 616 yuan/t.


The miner is bundling spot coal sales with long-term contracts at a certain proportion. Therefore, the comprehensive prices would be lower than they look like, a Guangdong-based trader disclosed.


Also, it can provide sufficient quantities of Inner Mongolia-originated coal, which is undersupplied in the spot market, the trader added.


While the duration of downward price trend remains uncertain, the prevailing market sentiment suggested it could last until the end of the month.


Coal stockpiles at Qinhuangdao port remained relatively stable at 5.3 million tonnes as of August 16, indicating a basic equilibrium between supply and demand.


In major mining regions, coal prices maintained a moderate decrease. Wholesalers at railway terminals adopted a cautious "wait-and-see" approach amid sluggish portside market. Meanwhile, miners facing potential losses refrained from making offers, with price negotiations anticipated to continue until clearer market conditions emerge.


On August 17, the CCI index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed by Sxcoal at 809 yuan/t FOB with VAT, down 6 yuan/t from a day ago; 5,000 Kcal/kg NAR coal assessment was at 700 yuan/t, off 3 yuan/t, and that for 4,500 Kcal/kg NAR at 600 yuan/t, a 5 yuan/t fall.  


(Writing by Alex Guo  Editing by Harry Huo)
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