Market Diverges: Prices Rise Steadily at Mines While Ports Remain in Stalement

China's coal market has recently shown a divergent trend. Coal prices at major mining regions have continued to edge higher, supported by smooth sales and strong seller confidence. In contrast, the Bohai Rim port market remains locked in a stalemate, with spot prices moving sideways and trading activity subdued, creating a “hot production area, cold port market” pattern.

Mine-Site Prices Continue to Rise Gradually

Tight Supply Supports Market

First, strict safety inspections have continued throughout June, leading to tighter coal supply in major producing regions. Some mines in Shanxi remain suspended, while resumed operations are required to strictly adhere to approved production capacities, limiting additional market supply. As a result, mine-site coal availability remains relatively tight.

Power and Industrial Demand Provide Dual Support

Second, both power generation and industrial demand are supporting the market. Rising summer temperatures are increasing pressure on thermal power plants to secure fuel supplies, prompting orderly inventory replenishment. Meanwhile, industrial demand remains resilient, with pig iron production staying at high levels, coking coal and coke markets strengthening, and coal chemical plants maintaining stable operating rates. Overall, supply and demand in producing regions remain tightly balanced, providing solid support for gradual increases in mine-site coal prices.

Port Market Remains Stagnant

In sharp contrast to the stronger production-area market, coal prices at Bohai Rim ports have entered a period of high-level consolidation. Since June 4, the CCTD Bohai Rim spot reference price for 5,500 kcal/kg thermal coal has remained unchanged at 863 yuan/tonne, staying flat for more than half a month.

On the one hand, support comes from rising production costs and expectations of stronger summer demand. Higher mine-site prices have increased delivery costs to ports, reducing traders' willingness to sell at lower prices. In addition, many market participants remain optimistic about demand during the July-August peak consumption season.

On the other hand, upward momentum is constrained by high port inventories and weak near-term demand. Bohai Rim port stockpiles remain elevated compared with the same period in previous years, creating inventory pressure. End-user coal consumption has yet to enter the peak season, while most utilities continue to rely on long-term contract coal, resulting in limited spot inquiries. Improved competitiveness of Indonesian coal has also diverted some demand away from domestic port cargoes.

Overall, the port market stalemate reflects a conflict between bullish expectations for future summer demand and currently weak consumption, making it difficult for prices to break out in either direction.

Outlook: Mine Prices Likely to Stay Firm While Ports Await Demand Recovery

Looking ahead to late June, the coal market's structural divergence is expected to persist. Mine-site prices are likely to remain stable to slightly stronger, while Bohai Rim port prices will probably continue to move sideways. A market turning point will largely depend on the pace of demand recovery.

Market participants should closely monitor domestic temperatures. If power plants accelerate inventory replenishment and port inventories decline rapidly, coal prices at ports may strengthen accordingly. Overall, market fundamentals remain supportive, and the broader upward trend is intact. The intensity of summer demand growth will be the key factor determining the extent of the next round of coal price increases.