The latest round of downpours disrupted thermal coal production in Shanxi, Shaanxi and Inner Mongolia, China's three major coal production provinces, since August 17, as local authorities asked mines to halt operations to avoid possible risks.

Sxcoal learned most coal mines in Jungar Banner, one coal hub in Inner Mongolia, were asked to stop production due to strong rains, and multiple roads in the area were also closed. This made coal trucks to take detours and disrupted coal shipment.

Yet one Ordos-based miner, another coal heartland in Inner Mongolia, said rainfall impact wasn't significant on them. "We would resume production if the rain doesn't start this evening," he said.

The miner added all their slack coal was delivered to power utilities, with 4,200 Kcal/kg NAR slack coal with 0.8% sulfur at 470 yuan/t, and end buyers recently scrambled for lump coal and his offers for washed 30-80 mm lump coal (CV 4,600, S 0.2%) was at 640 yuan/t.

Pit-head coal mines took the major blow from rainfall this time, one miner said. "The market basically stopped in Ordos as coal mines suspended production and shipping companies stopped coal loading," he added.

Some roads in norther Shanxi were even destroyed by the rain, which hindered outbound coal shipment and led to relatively high coal inventory. But sources told Sxcoal most inventories are pre-sold cargoes.

Slack coal (CV 5,000, S 0.6%) was mainly offered at 910-920 yuan/t in Xinzhou of Shanxi, mine-mouth with VAT, with large price increases reported. This is partly related with local destroyed roads.

One local trader raised offers for 5,000 Kcal/kg NAR thermal coal with 1.1% sulfur up by 46 yuan/t to 917 yuan/t, and 4,200 Kcal/kg NAR raw coal with sulfur≤1.11% up by 109 yuan/t to 732 yuan/t, both on mine-mouth basis with VAT.

"We received inquiry from power utilities in Shandong, but their prices were far below our costs. So the trade didn't conclude," another coal trader in Datong, also in Shanxi, noted. He offered thermal coal with 4,500 Kcal/kg NAR, 5,000 Kcal/kg NAR and 5,500 Kcal/kg NAR respectively at 780 yuan/t, 880 yuan/t and 1,020 yuan/t.

Thermal coal miners in Yulin of Shaanxi generally reported less impact from the rain, and coal prices remained strong amid relentless demand from metallurgical, coking and chemical plants.

Washed slack coal (CV 5,600, S 0.3%) in Yulin was offered at 1,050 yuan/t, mine-mouth with VAT, up 60 yuan/t.

(Writing by Rebecca Liu  Editing by Tammy Yang)
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