China coal short-term outlook March 2023

The QHD price fell RMB100/t to around RMB1,100/t in March. A high imports and lower than expected domestic demand were the key reasons. As April is the shoulder demand period for thermal coal, coal inventory at Qinhuangdao port has increased to over 6 Mt and Australian coal will help coal imports remain at 20+ Mt per month. These will continue to put pressure on the price. We expect the QHD price to trend downwards even the upcoming maintenance on the Daqin rail line might slow the pace. The high expectations of a quickly revived economy supported market confidence and prices in early March. However, after the Two Sessions, the market sentiment cooled, returning to over-sensitivity, with minor dynamics like the mild drop in steel demand reversing prices. Meanwhile, the supply proved to be minorly impacted by mine accidents and import volumes remained high, concluding with a weakening coking price and a better margin for steel mills and coking plants.