Since last week, the thermal coal market at Bohai Rim ports has remained largely stable amid a supply-demand stalemate. As of June 16, the CCTD-Spot Index for 5,500 kcal/kg, 5,000 kcal/kg, and 4,500 kcal/kg coal stood at RMB 863/mt, RMB 774/mt, and RMB 675/mt, respectively, unchanged from the previous week.
Frequent rainfall across China's coastal regions has recently eased high temperatures. At the same time, persistent wet weather has disrupted coal transportation and affected some industrial production activities, leading to lower power demand. As a result, daily coal consumption at coastal power plants has declined noticeably, while inventories have continued to accumulate. CCTD data show that coal inventories at sampled coastal end-users currently stand at 35.28 million tonnes, up 2.8% from the beginning of the month.
Meanwhile, railway coal transportation has remained strong, with the Daqin Railway operating at full capacity. This has supported high inbound coal volumes and inventory levels at Bohai Rim ports. According to CCTD data, coal inventories at major Bohai Rim ports currently total 28.37 million tonnes, near the highest level of the year and close to the level recorded during the same period last year.
Against the backdrop of elevated port inventories, steadily rising downstream stockpiles, and adequate long-term contract supplies, end-users have shown limited interest in purchasing spot cargoes. The small number of inquiries in the market have generally involved aggressive price negotiations, weighing on overall market sentiment.
However, despite sluggish trading activity and difficulties in moving cargoes, sellers have largely maintained their offers and adopted a wait-and-see approach rather than cutting prices. Several factors continue to support the market:
First, transportation costs to ports are continuing to rise. The producing-region market has remained firm, with mine-mouth coal prices moving higher, pushing up delivery costs to ports. According to CCTD monitoring data, prices for Yulin 6,100 kcal/kg coal, Ordos 5,500 kcal/kg coal, and Northern Shanxi 5,000 kcal/kg coal currently stand at RMB 725/mt, RMB 625/mt, and RMB 595/mt, respectively, up RMB 30/mt, RMB 25/mt, and RMB 5/mt from a week earlier. In the near term, strict safety inspections are expected to continue, limiting improvements in mine capacity utilization. Under expectations of tight supply, coal prices at production areas are likely to remain firm.
Second, railway capacity for spot cargoes remains tight. During the critical summer peak-demand supply season, railway resources are being prioritized for long-term contract coal. As a result, obtaining railcar allocations for spot cargoes remains challenging. While spot sales at ports have been slow, replenishing inventories is not easy either.
Third, sellers are positioning for the upcoming peak consumption season. Historical data indicate that coal consumption is currently entering a seasonal uptrend, with the peak demand period typically occurring between July and September. Expectations for stronger summer demand therefore continue to provide support to market sentiment.
Overall, frequent rainfall in coastal regions is expected to persist in the short term, meaning the current situation of high inventories and weak demand in the Bohai Rim spot thermal coal market is likely to continue. Nevertheless, rising transportation costs, tight railway capacity, and expectations for seasonal demand growth are providing support to the market. As a result, the current stalemate is unlikely to be resolved in the near term. Market participants should closely monitor the recovery of upstream supply and changes in downstream coal consumption in the coming weeks.
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