Perth/Singapore — Domestic thermal coal prices at China's northern ports have rebounded strongly to around Yuan 630/mt FOB Qinhuangdao basis 5,500 kcal/kg NAR from a low of around Yuan 600/mt early this week, market sources said Wednesday.
"Domestic 5,500 NAR [prices] have rebounded, stocks [at Qinhuangdao port] are around 6.35 million mt today. At the current market, domestic 5,500 NAR coal is Yuan 630/mt FOB, a market source in China said, on Qinhuangdao port prices for this grade of domestic thermal coal.
This price in Chinese currency was equivalent to about $78.60/mt FOB Qinhuangdao excluding 16% Chinese value added tax.
An upward shift in Chinese domestic coal prices provided a little extra headroom for import prices to edge higher at China's southern ports, sources said.
Prices on a delivered basis to China rose $1/mt in Asia trade to around 77/mt CFR for Australian high-ash thermal coal, mostly on firmer Capesize freight rate of $14.30/mt.
"China has started its restocking period," another market source said. Meanwhile, recent sluggish demand for China and India has thrown up some interesting trade flows for Australian and South African thermal coal, sources said.
HIGH-ASH MOVES TO EUROPE
Some ships have been chartered to deliver cargoes of Australian 5,500 kcal/kg NAR thermal coal to Europe, one market source confirmed.
Capesize vessel freight from eastern Australia to the ARA trading hub in Northwest Europe is currently around $16/mt, he said.
This indicates a delivered CIF ARA price for this grade of Australian high-ash thermal coal of around $78.75-$79/mt, according to S&P Global Platts calculations.
This is significantly lower than a 5,500 kcal/kg NAR-adjusted CIF ARA price of $92/mt derived from a current CIF ARA price of $100/mt on a 6,000 kcal/kg NAR basis.
"We are seeing some cargoes being fixed from Richards Bay to Rotterdam," he stated.
Adding to this, the source believed these cargoes were 5,500 kcal/kg NAR South African thermal coal, rather than 6,000 kcal/kg NAR, because the former is priced at a steep discount to the latter.
Richards Bay to Rotterdam Capesize vessel freight is current trading at $10.70/mt.
Currency fluctuations stemming in part from a rising US dollar are affecting a number of coal-producing countries including Australia, Indonesia and South Africa, he said, and could be a precursor to some volatility in these countries' thermal coal markets.
"What is happening in Turkey is affecting Indonesia and South Africa," he said, referring to the sharp depreciation in Turkey's lira currency.
SEPTEMBER BIDS
Very few bids were seen in the market for Newcastle 5,500 NAR thermal coal, except for some onscreen bids for 25,000 mt parcels at levels higher than in the wider spot market.
These bids were at $68.50/mt FOB Newcastle for a September-loading parcel, at $69.70/mt for October and $70/mt for November, market sources said.
However, another market source pegged fair market value for Newcastle 5,500 kcal/kg NAR thermal coal for September shipment at $63/mt FOB.
INDIA, INDONESIA
"There is some more interest from Indian buyers for late-September cargoes. They are now back to do their restocking," a market source said.
An Indonesia-based trader said market activity has improved this week, adding he received an offer at $40/mt FOB Kalimantan for an end August-loading Supramax of 3,800 kcal/kg NAR coal.
There are some bids from India now, he said, noting this buying interest is slightly below $40/mt FOB which is better than last week.
"I am seeing a bit of support in the prices. It looks like China and India are slowly coming back into the market," an Indonesia-based trader said.
He heard a trade for an August-loading Supramax shipment of 4,200 kcal/kg GAR coal to India at $39.50-$40/mt FOB Kalimantan.
"It's a good thing inquiries are coming in, for some traders are now offering shipments a bit aggressively," he added.
Supramax shipments of 3,800 kcal/kg NAR Indonesian thermal coal were offered at $40-$42/mt FOB Kalimantan, he said.
Indian import market activity was impacted Wednesday by a public holiday for Independence Day, sources said.
