China's portside thermal coal market lost momentum on July 20, despite high cost for inbound shipments and persisting heatwave in some places of the country.

Prevailing offers for benchmark 5,500 Kcal/kg NAR coal retreated to 880-885 yuan/t FOB with VAT at northern ports from the previous 890-900 yuan/t. Cargoes of 5,000 Kcal/kg NAR coal were broadly offered at 780-790 yuan/t, down from 780-810 yuan/t. Offers for 4,500 Kcal/kg NAR were scarce, with a few cargoes quoted at around 690 yuan/t.

A growing number of traders were willing to close their positions to avert a possible price decline, leading to abundant availability in the market, especially for Shanxi-originated coal, participants noted.  

“The sentiment starts turning soft in the afternoon. Traders are offering low-sulfur 5,000 Kcal/kg NAR coal at 790 yuan/t and high-sulfur at 780 yuan/t, but the prices seem unable to hold on. The market is likely to move downward with tepid demand,” said a Tianjin-based trader.

Despite downward revisions, there was limited buying interest from buyers, who began to adopt a wait-and-see approach.

For coal railings from mining areas, the costs remained above the current selling prices at northern ports due to rising pithead prices. As a result, independent trading houses scaled down their rail shipments towards ports, while large mining groups with lower costs were able to offer more competitive prices.

Scorching weather has eased in the north and part of southwest, but places in Xinjiang, Gansu and Shaanxi are expected to keep baked in the few days to come. In coastal regions of south and east, however, heavy rainfall and gales are expected in the next 10 days along with the arrival of 1-2 typhoons.

In a border perspective, China has issued a package of polices aimed at boosting the economy, including an action plan to shore up the private sector. The policies touch on a raft of concerning issues such as market entry, fair competition, financing support, payment defaults, intellectual property rights and legal protection.

Some market analysts, however, argued these policies are not quick enough to rebuild the private confidence, thereby serving limit help to a notable increase in economic activities. Thereby, its impact on commodity prices could be limited in the near term.

On July 20, the CCI index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was 880 yuan/t FOB with VAT, flat from a day ago; 5,000 Kcal/kg NAR coal assessment was at 782 yuan/t, unchanged day on day, and that for 4,500 Kcal/kg NAR also stood stable at 672 yuan/t.

(Writing by Alex Guo  Editing by Harry Huo)
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