Coal shipments to ports are operating at a loss, with trading companies reducing their shipments. This trend is likely to keep port inventories on a downward trajectory, continuing to support sellers' price-firming stance. However, relatively warm temperatures during the first half of this winter allowed some power plants to build inventories passively before the peak season. Consequently, as colder weather sets in, downstream power plants have shortened their restocking periods. Relying on high inventory levels, their procurement mindset has eased, with purchases primarily focused on small-batch, essential needs, providing limited support for coal prices. On Monday, ocean freight rates were the first to decline. With supply gradually recovering, coal prices are expected to hold steady until the end of this week.
This week, pithead coal prices stabilized with minor adjustments. Following slight increases in large conglomerates' external procurement prices, some cost-effective mines saw robust shipments, leading to modest price hikes. However, limited restocking demand at terminals and end-users weakened upward momentum, resulting in short-term price consolidation. The Bohai Rim port market remained relatively stable. Sellers maintained firm quotations, while downstream demand was mediocre with severe price pressure, limiting sustained upward momentum. However, rapid inventory declines at Bohai Rim ports coupled with inverted shipping costs have reduced upstream willingness to sell at low prices, pushing the market into a sideways trading phase.
Daily shipments on the Daqin and Tanghu lines frequently hit new lows. Against the backdrop of persistently declining inventories at Bohai Rim ports, sellers' willingness to support prices strengthened, with overall quotations remaining stable to firm. Amidst recovering demand and rising coal prices, railway coal deliveries have declined, accelerating port inventory depletion. The supply-demand dynamics at Bohai Rim ports continue to improve. Medium- and low-calorie coal, offering superior cost-effectiveness, has seen relatively active inquiries and transactions, with traders slightly raising quotes. Demand for high-calorie coal remains relatively limited, though traders' sentiment has generally improved, with more reluctance to sell at low prices. While coal prices have stabilized, upward momentum remains weak.
A new cold front swept across China, bringing widespread rain and snow to central and eastern regions. Average temperatures across most areas dropped by 3-5 degrees Celsius from previous significantly elevated levels. The sudden temperature drop accelerated coal consumption at power plants, with daily consumption at coastal power plants in eight provinces peaking at 2.4 million tons, driving gradual release of terminal restocking demand.
Comprehensive analysis indicates that coal inventories at mid-to-downstream ports remain elevated, with no significant shortages at end-user power plants. Following the New Year holiday, coal mines are gradually resuming normal production, bringing winter supply efforts back on track. End-user procurement will primarily focus on fulfilling new annual contracts, leaving limited room for market improvement. Additionally, sustained cold weather has driven daily coal consumption at end-user power plants into a seasonally high operating range. Although power plant inventories have seen a slight decline due to increased consumption, the absolute total remains above the safety margin, with days of coal reserves generally still at safe levels. Against this backdrop, power plants have maintained a cautious and stable procurement strategy, with relatively low purchase volumes providing some bottom support to the market.
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