Thermal coal sellers struggled to draw out firm bids from Chinese and Indian buyers as slow buying interest persisted amid rains in South Kalimantan, sources said.
An Indonesia-based trader said Asia’s seaborne thermal coal market has not seen much improvement and was still relatively muted. “Demand is not active as market participants are waiting for prices to correct,” he said.
The trader noted some variations on Indonesian coal prices, describing the situation as “confusing at the moment.” He heard offers for gearless-vessel July shipments of 4,200 kcal/kg GAR coal at $49-$49.50/mt FOB Kalimantan.
“South Kalimantan is having a lot of difficulty with weather right now,” he said, adding that torrential rains have contributed to delays in vessel loading.
Another Indonesia-based trader said some of his Chinese customers were looking to buy shipments ranging from 3,000 kcal/kg NAR to 3,800 kcal/kg NAR, but not many cargoes were offered.
Some of the low CV coal producers are completely sold out for July and August, while some have cargoes but are offering at high prices, he added.
Geared-vessel cargoes of 3,800 kcal/kg GAR were offered at $39-$40/mt FOB, which he said was “too high for Chinese buyers.”
Even in Vietnam, there were several buyers willing to buy any grade and quantity currently, but not much supply was available, he added.
An Indonesia-based producer said his 3,200 kcal/kg GAR product was completely committed until August, and China was the major buyer of this grade. Currently, because of high prices, Chinese buyers were hesitant to conclude deals as they deemed prices as high.
Their maximum bid was at $28/mt FOB, while offers were at $30/mt FOB, he said. “At $30/mt price, India cannot buy this grade even for stock and sale purpose,” he added.
He said lower grade suppliers had plenty of options to work with apart from China and India, adding that appetite in Thailand, Vietnam and the Philippines has grown for lower CV coal.
According to a Thailand-based trader, he had a deal done for a 55,000 mt shipment of 5,100 kcal/kg GAR coal, with 1% maximum sulfur, at $72.60/mt FOB for mid-July.
A China-based trader said there was low liquidity in spot trades this week.
RISING COAL STOCKS AND FALLING CURRENCY
He described China ‘s import market for thermal coal as relatively weak against the backdrop of rising stockpiles at coal-fired power plants and depreciation in the Chinese yuan currency.
“Chinese buyers would prefer to seek cargoes in the domestic market than to buy import cargoes as the yuan is depreciating fast. I would not be surprised if the yuan goes beyond [the rate of] 6.70 per US dollar over these two days,” he said.
Chinese buying interest for Australian 5,500 kcal/kg NAR high-ash spot cargoes retreated in Asia trade to $74-$76/mt FOB Newcastle, sources said.
A day earlier, buying interest from China for this high-ash grade of Australian thermal coal stood at $77-$78/mt FOB, representing a sharp decline of $1-$3/mt. Yet, there was a bid seen onscreen for a Capesize cargo of Australian 5,500 kcal/kg NAR thermal coal at $78.50/mt FOB, sources said.
Interestingly, a Panamax cargo of Newcastle 5,500 kcal/kg NAR thermal coal for spot shipment was heard bid at a higher market price of $80/mt FOB.
Market sources said that sometimes blended shipments appear on the spot market in Panamax-sized cargoes and comprise a mixture of Newcastle 6,000 kcal/kg NAR and 5,500 kcal/kg NAR grades.
Some sources stressed that blended Panamax 5,500 kcal/kg NAR cargoes are a different market altogether to direct business for high-ash thermal coal to China in Capesize cargoes.
But in addressing the Panamax shipment’s relevance to pricing, one market source said, “technically it is FOB, so all should be relevant.”
Source: PlattsPrevious Next