Market sentiment at Bohai Rim ports is bullish. Driven by tight supplies at production sites, rising mine-gate prices, severe cost inversion (where market prices fall below procurement/transport costs), and the depletion of low-cost inventory, traders have sharply raised their quotes; securing suitable cargo now requires paying a premium of 20–30 yuan/tonne above the benchmark index. While coastal power plants have some flexibility regarding inventory management, the need to stockpile means their acceptance of higher prices is slowly increasing.

Bullish factors: First, supply at production sites is constrained. Routine safety and environmental inspections in the major producing regions of Shanxi, Shaanxi, and Inner Mongolia—along with production halts for rectification at some mines—have limited output. Spot resources are scarce, and low pit-head inventories are supporting prices at the source. Second, there is a solid floor for end-user demand. Despite the end of the "dog days" of summer, high temperatures persist in some regions, keeping daily coal consumption at power plants relatively high. Coal-to-chemical facilities have completed maintenance, leading to a slight month-on-month increase in chemical-sector coal consumption. Meanwhile, stockpiling by the residential and construction material sectors has boosted demand for medium-to-high calorific value coal, offsetting the decline in demand from thermal power plants. Third, the supplementary role of imports is limited. High overseas quotes, rising shipping costs, and slow approval processes in exporting countries (such as Indonesia) have resulted in an inverted price spread, limiting the impact of imports on the domestic market and making it difficult to significantly bridge the domestic supply gap.

Bearish factors: First, there are expectations of mines resuming production. Some mines that had previously halted operations are gradually passing safety inspections and restarting, creating expectations of supply recovery that dampen the potential for further price increases. Second, daily consumption at end-users has peaked. With the end of the peak summer heat, high temperatures have eased across the country. Abundant hydropower generation during the flood season in the Southwest, combined with rising wind and solar output, has diverted load away from thermal power; consequently, daily coal consumption at power plants in the eight coastal provinces has peaked and fallen back to 2.3 million tonnes. Power plant inventories remain within a safe range, and restocking is driven primarily by long-term contracts and essential needs. Plants generally resist high market prices and seek to drive costs down, preventing explosive growth in thermal coal demand. Furthermore, the baseline inventory at Bohai Rim ports remains high. Although port inventories have declined, they remain significantly higher year-on-year. While short-term supplies are tight, the long-term outlook suggests looser supply conditions; this acts as a constraint on rapid coal price increases, prompting some traders to lock in profits when prices are high.

In summary, major production regions are facing prolonged, high-pressure safety inspections and strict approval processes for resuming operations, while coal washing plants in some areas are undergoing rectification and inspections, resulting in low inventory levels. Additionally, scheduled production cuts and maintenance at mines toward the end of the month continue to limit supply at the source. Meanwhile, "upside-down" margins (where shipping costs exceed market prices) at Bohai Rim ports make a significant increase in inbound shipments unlikely. In the import market, conditions remain strong; factors such as low river water levels and RKAB approval delays have limited offers for Indonesian coal, and firm high-level international quotes have driven up import tender prices. Port coal prices are expected to continue rising next week. (Source: China Energy Network)

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