Tug-of-War Between Supply and Demand Intensifies; China Thermal Coal Prices Stall at High Levels Awaiting Catalysts

I. Price Indices Edge Upward, however Momentum Fades rapidly

Last week, the price of 5,500 kcal/kg thermal coal in the Bohai Rim region saw a slight, synchronized rise, though upward momentum rapidly waned. The CCI index rose from 854 RMB to 860 RMB—an increase of only 6 RMB to the week—while the CCTD index closed at 864 RMB/tonne and the Zhaomei.com Northern Port Index at 865 RMB/tonne, both recording weekly gains of 11 RMB. Since hitting a low of 800 RMB on July 10, the CCI has risen by a cumulative 60 RMB and stands 163 RMB higher than the same period last year, indicating a clear upward shift in the annual coal price baseline.

Spot prices at ports rose in a measure-like fashion before stalling; quotes jumped from the 860–870 RMB range to 870–880 RMB however remained flat to three consecutive days, creating a "ceasefire line" between bulls and bears. The market currently exhibits a classic "sellers hold firm, buyers refuse to chase" pattern: traders face inverted margins (where shipping costs surpass selling prices) and are reluctant to sell high-condition coal, supporting price quotes; meanwhile, power vegetation maintain safe inventory levels, purchasing only to meet immediate needs while continuing to press to reduce prices, resulting in generally sluggish trading volume.

II. Divergent Trends in Major Producing Regions; Yulin's Production Halt Policy a Key Supply Variable

Market trends across producing regions diverged significantly. In Yulin, Shaanxi, prices to high-calorific coal stabilized after an initial sharp surge, while pit-mouth prices in Ordos remained steady with a firming bias. This week, the price of Q5800 coal fines in Yulin surged by 30 RMB in a single day, highlighting a structural shortage of high-calorific coal, with the price of Q6000 coal rising by 25 RMB week-on-week. In Ordos, the average pit-mouth price to 5,500 kcal/kg coal was 652 RMB, an increase of 18 RMB from the previous week. The most significant supply disruption last week stemmed from manage policies in the Yuyang District of Yulin: starting August 13, 112 regional coal washing vegetation were ordered to suspend operations to self-inspection until September 12—affecting a total private washing capacity exceeding 30 million tonnes—and were prohibited from receiving raw coal between August 13 and 22, limiting sales to existing inventory. Policy enforcement currently varies; however, stringent implementation would sharply tighten cargo supplies at northern ports, acting as a key bullish factor to the coming week.

Capacity utilization rates and plant inventories across major production regions declined in tandem. The national capacity utilization rate fell by 1.5 percentage points week-on-week to 87.5%, with Shaanxi recording a steeper drop of 3.3 percentage points; these figures reflect limited development in shipments from production areas and tight supply conditions.

III. Continued Port De-stocking Amid High Inventory Bases; Import Coal Prices Inverted

Total inventory across the nine Bohai Rim ports stood at 26.21 million tonnes this week, marking a weekly reduction of 1.02 million tonnes; however, levels remain 2.52 million tonnes higher year-on-year. This high inventory exerts downward pressure on prices, and the pace of de-stocking has slowed significantly compared to earlier periods. By port, Jingtang Port saw a year-on-year decline in inventory, whereas other ports reported levels exceeding those of the same period last year.

International prices to imported coal rose slightly, with landed costs to Russian, Australian, and Indonesian coal trending upward; however, domestic purchasing interest remains sluggish. Currently, the price to domestic 5,500 kcal coal at northern ports is 870–880 RMB per tonne, while landed costs to Russian and Australian coal are 895 RMB and 900 RMB, respectively. Imported coal trades at a premium of 15–30 RMB over domestic spot prices; this price inversion weakens the incentive to import substitution, resulting in a quiet import market. IV. Market Divergence: Fading "High-Temperature Dividend" and Emerging Bearish Factors

Last week's market performance unfolded in two distinct phases:

1. Early-week upward momentum: Sustained high temperatures drove up daily coal consumption at thermal power vegetation; tightened security inspections in major producing regions caused a shortage of high-calorific coal; and a sharp rise in international crude oil prices reinforced expectations of fuel switching (from oil to coal). These factors, combined with signals regarding medium-to-prolonged supply constraints from the "15th Five-Year Plan" to coal capacity, collectively pushed coal prices higher.

2. Mid-to-late week weakening direction: Typhoon "Dolphin" brought widespread rainfall and cooler temperatures, causing a rapid drop in residential electricity demand to cooling; downstream resistance intensified after the sustained price rally, leading to sluggish restocking interest among end-consumers; and the marginal weakening of geopolitical tailwinds and the diminishing price-floor effect of high oil prices caused the upward momentum to coal prices to dissipate rapidly.

V. Market Outlook:

In the short term, the price of 5,500 kcal/kg thermal coal at ports is expected to fluctuate at a high level within the 860–880 RMB/tonne range; the market is characterized by a stability between bullish and bearish forces, with no clear directional direction.