This week, a new cold wave will sweep across China, lasting for about a week. However, with the Spring Festival approaching, industrial electricity demand is declining, and large-scale centralized procurement by end-users remains scarce. Restocking activities are likely to be driven primarily by phased, small-batch essential demand. Notably, after three weeks of inventory drawdowns, stockpiles at Bohai Rim ports have approached normal levels, providing some support for port coal prices. A minor rebound in coal prices is anticipated.

Last week, widespread cooling swept across the nation. Minimum temperatures along the middle and lower reaches of the Yangtze River dropped to 0°C, while most areas south of the river remained below 10°C, marking the coldest phase of this winter for most regions. Despite the cold weather boosting expectations for increased coal consumption at power plants, terminal procurement activity did not accelerate. The number of ships anchored at Qinhuangdao Port dropped to as low as four or five vessels. Overall, power plant inventories remain within safe ranges, and the pace of inventory drawdown is generally manageable. Coupled with the continued decline in coal prices, most terminals maintain a wait-and-see attitude, continuing to focus on depleting their own inventories and transporting long-term contract coal. Only a few power plants with low coal reserves showed increased willingness to purchase market coal. Following the cold snap, power plant inventories showed no significant decline, and the enthusiasm for dispatching vessels remained weak. This indicates that power plants replenished their inventories in a timely manner and that imported coal has been strongly replenished. At present, it appears that the short-term cold snap cannot drive further release of end-user demand.

Market positives: First, strong cold fronts returning to East and Central China this week will drive seasonal growth in power plants' heating coal demand. Despite high inventories at ports and power plants, some plants may moderately replenish stocks based on their inventory levels and production plans. Those with faster inventory depletion may increase market coal purchases. Second, with the Spring Festival approaching, some end-users may judge coal prices have bottomed out and initiate pre-holiday stockpiling. Notably, stable production in the chemical industry will increase essential thermal coal procurement, providing some demand support. Third, imported coal volumes may decline. Indonesia's annual RKAB approvals are progressing steadily this year, while Russia's winter port capacity constraints persist. Overall imported coal supply may contract, mitigating the impact of imports on the domestic market to some extent and supporting domestic thermal coal price stability. Fourth, long-term contract coal provides a floor. Currently, market prices for medium-to-low calorific coal at Bohai Rim ports are below long-term contract prices, highlighting the latter's role in anchoring market prices. Significant downward pressure on coal prices is unlikely.

However, bearish factors remain: Against a backdrop of high inventories, the scope for terminal enterprises to replenish stocks is limited. Furthermore, with the Spring Festival approaching, industrial enterprises in coastal areas are gradually suspending production for holidays, leading to a decline in industrial electricity consumption. Power plants' daily consumption is unlikely to sustain demand, which is expected to remain sluggish.

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