By MuyuXu and Chen Aizhu

BEIJING/SINGAPORE – Chinese coal traders have been selling their cargoes or trying delay imports because of a price drop of half a billion dollars that left them unprofitable.

In the last three weeks, domestic thermal coal futures fell by half after top miners were ordered to lower prices and boost output immediately. The move was made to rein in rising prices which had almost quadrupled over the previous year.

After easing in October, imports will likely slow down in November and December due to the Chinese government intervening.

Three coal traders based in China said that importers tried to sell their coal shipment they had booked for October, when the prices were record highs, despite the falling price. They suffered losses between $40 and $100 per ton.

Some buyers refused to sign contracts. They forfeited deposits of about 10%.

Others buyers try to defer incoming shipment in order that they can later sell current supply if the market recovers.

You don’t have many options. One of the traders from China said that he had two options: either eat the loss on the already-arrived cargoes, or negotiate with upstream suppliers to postpone loadings for future orders.” He works for a utility run by the state, which sells the shipment onto small traders.

According to two traders, delays in shipments could result in imports falling by 10%-30% compared with the current average.

China is the largest coal importer and consumer in the world. Each month, China imports about one-tenth to 20-30 million tonnes of coal, mostly from South Africa and Russia.

Refinitiv Eikon trade flow data shows that China’s coal imports for November will be 16.3 Million tonnes. This is 26% less than October.

After a last-week panicky spell that traders called a “stampede”, physical spot transactions at the top Chinese ports have slowed as China’s coal futures stabilized at 900 Yuan ($141/tonne) this week.

A Singaporean trader stated last week that sellers were “stepping on one another’s toes” to get rid of cargoes.

No one cares about the coal price right now. It is their priority to find a suitable home for expensive cargoes before they lose value.

Chinese importers paid over $160 per ton on a freeboard basis for Indonesian Thermal coal, which has a heating value exceeding 3,800 kilocalories. But that number dropped to $100 for November and $88 in December.

The National Development and Reform Commission of China, which is the nation’s most important economic planner signaled last week that it might slow down its intervention after Chinese coal prices fell over the past 10 trading days.

Colder than usual temperatures, which boosted heating demand, also helped support prices.

However traders should be wary of any government intervention if the prices rise again.

A Beijing-based trader said that “with so much uncertainty still hanging,” he did not know when prices would return to their right track.

($1 = 6.3921 renminbi)