Still too much stockpiles at major Chinese and Indian ports.
Looks shit for a while yet.

Sxcoal Issue 48# | China's thermal and coking coalmarkets continue to fall; met coke slightly improves

China'sthermal and coking coal markets still on the fall last week, and met cokeimproves moderately after the 10th price cut...

China's thermal coal marketcontinues to face downward pressure from weak demand, high inventories, andfalling prices, though supply constraints from safety inspections and potentialpolicy adjustments may temper near-term declines. The coking coal marketremains cautious amid volatile demand and subdued import activity, while cokeprices are expected to stabilize ahead of the "Two Sessions" onpolicy optimism but lack strong upward momentum due to soft cost and demandconditions.

Thermal Coal

Portside Market: The portside thermal coal market in China continued todecline last week due to weak transactions and buyers pushing for lower prices.Coal stocks at major northern ports such as Qinhuangdao, Jingtang, andCaofeidian rose by 0.42% week on week to 27.38 million tonnes on February 28,surging 33.35% year on year. Sellers were compelled to accept lower prices toreduce inventory pressure.

Price Trends: The Fenwei CCI index for5,500 Kcal/kg NAR domestic spot coal fell to 699 yuan/t FOB northern Chinaports with VAT on February 28, down 29 yuan/t week on week. The CCI 5500 Importindex was at $83.0/t CFR southern China ports, down $4.0/t compared with theprevious week.

Market Sentiment: Market sentiment remained bearish as buyers adopted await-and-see approach due to ongoing price declines and high domestic coalstocks. Some miners raised prices to test the market following increased safetyinspections and marginal demand recovery from chemical plants. However, theoverall downtrend is expected to continue, albeit at a slower pace, due tosupply constraints ahead of the "Two Sessions".

Import Market: The import market saw a divergence between low-CV andhigh-CV coal prices. Low-CV coal prices remained firm due to supply disruptionsand rising freight rates, while high-CV coal prices continued to decline due toweak demand and cost-effective domestic supplies. Chinese interest in theseaborne import market may weaken further due to high domestic coal stocks anduncertainties related to the transition to HBA-linked coal export policies.

More details in our latest weeklythermal coal review, incl. our weekly survey on thermal coal mines, marketchanges and updates on coal consumption in domestream sectors.»CLICK HERE

Coking Coal

Market Overview: China's coking coal market softened last week, withprices remaining range-bound. Coking plants and some middlemen's increasedrestocking efforts boosted spot trading activity and caused slight priceincreases for certain grades. However, sentiment deteriorated mid-week due tofalling coke prices, which reduced coke-making profits and led to expandedproduction cuts. Weak end-user demand further pressured the market, resultingin difficulties for miners in offloading stocks.

Supply and Demand: Coking coal supply saw modest growth as some minesresumed operations. Raw coking coal output at 363 surveyed minesincreased by 0.08% week-on-week to 12.87 million tonnes, with capacityutilization averaging 89.55%. However, demand remained volatile. While somelow-stock coking plants slightly increased purchases, most showed littleinterest in spot supplies, maintaining low feed coal inventories.

Inventory: Coking coal inventories at surveyed mines and plantsshowed mixed trends. Raw coking coal stocks at the 363 mines decreased by 1.60%week-on-week to 4.31 million tonnes, while washed coal stocks fell by 1.24% to4.77 million tonnes. Coking coal stocks at 108 surveyed coking plants couldsustain 6.66 days of usage, up 0.12 day from the previous week. Despite someregions experiencing stock accumulation, rapid price declines in Shanxi helpeddeplete stocks at several mines.

Prices: In Shanxi, coking coal pricesfluctuated within a narrow range. Luliang high-sulfur lean coking coal pricesincreased to 1,030 yuan/t, while Linfen low-sulfur primary coking coal pricesfell to 1,310 yuan/t. In Inner Mongolia, prices were adjusted downward by60-100 yuan/t due to weak demand. In Shandong, washed gas coal prices remainedstable at around 1,040 yuan/t.

Mongolian Coal: Mongolian coal inflows through China's Ganqimaodu bordercrossing declined notably due to high inventory levels, with daily customsclearance averaging 790 trucks over February 24-27, down 233 trucksweek-on-week. Spot prices for Mongolian 5# raw coal fell to 880-890 yuan/t.

Seaborne Imports: Australian low-volhard coking coal traded at around $187/t FOB, equivalent to about 1,660 yuan/tCFR China with VAT. However, spot prices for Australian low-vol hard cokingcoal at northern ports fell to 1,440-1,450 yuan/t due to subdued marketsentiment and favorable domestic pricing.

More details in our latest weeklycoking coal review, incl. our weekly survey on coking coal mines, marketdynamics, etc. »CLICK HERE

Met Coke

Market Overview: China's metallurgical coke marketsaw marginal improvements following the implementation of the 10th pricereduction of 50-55 yuan/t. Despite these reductions, coke supply remained high,overshadowing limited demand growth. The slow recovery of molten iron output atsteel mills is a primary factor constraining demand.

Production side: Coke-making margins continued to shrink among cokingplants after the 10th price cut, with increasing numbers of plants operating ata loss. A survey by Sxcoal of 323 coking plants showed increased losses for theweek ending February 26. Some producers curtailed production due to modestdemand and negative margins, but overall coke supply remained ample as mostenterprises operated near breakeven levels.

Port: Traders at eastern transfer ports displayed a weakeningappetite for coke due to downward futures prices, which eroded theirarbitraging room. Coke stock accumulation slowed due to insufficient storagecapacity at the ports. High-stocked steel mills pressured traders for morediscounts, leading to a large gap between offers and bids, and actualtransactions dwindled.

Demand side: Demand for coke remained constrained by limited growthfrom traders and steelmakers. At steel mills, coke inventories decreased at aslower pace as they slightly raised purchases following the resumption ofconstruction activities after the holiday shutdowns.