High-ash Newcastle thermal coal prices hit a near three-month high in Asia trade Wednesday as buyers stepped forward attracted by its competitive price compared with higher CV Indonesian cargoes, market sources said.
A trade at $63.50/mt FOB Newcastle was concluded for a February-loading Panamax 5,500 kcal/kg NAR cargo late Tuesday, according to market sources.
Fair market value for this Australian grade was pegged by market sources Wednesday at the same level as the February cargo trade, $63.50/mt FOB Newcastle.
Newcastle high-ash thermal coal prices were last trading in the spot market at around $63-$64/mt FOB in early November 2018, according to S&P Global Platts prices.
JAPANESE POWER UTILITIES AVOID SPOT MARKET
Japanese thermal coal buyers are hesitating to enter the spot seaborne market for Australian 6,000 kcal/kg NAR thermal coal at current price levels of around $97-$100/mt FOB Newcastle, said market sources.
A February-loading Panamax cargo of Newcastle 6,000 kcal/kg NAR thermal coal traded at $97/mt on globalCOAL, after an April 50,000 mt shipment traded at $100.50/mt, Tuesday.
Japanese power utilities are instead drawing on their term contracts for extra cargoes of Australian thermal coal.
Availability of Japanese specification 6,000 kcal/kg NAR thermal coal from Australia is reportedly very tight with some producers already sold out until Q2.
Two spot tenders have appeared in the market this week for seaborne thermal coal, one is from a Philippines buyer seeking 19 Panamaxes of mostly Indonesian 5,100-5,500 kcal/kg GAR coal, and a second is from a Taiwan buyer wanting several Panamaxes of Australian 6,100 kcal/kg GAR thermal coal for delivery in H1 2019.
South Korean buyers booked some Australian cargoes before Christmas, but have been quiet since then, and reportedly have ample stocks to carry them through the winter.
CHINESE DOMESTIC LOSES STEAM
The recent rally in the Chinese domestic market appears to be losing steam as buying interest in the spot market remains weak, sources said Wednesday.
"Power plants are mostly stocked up and factory activities are winding down. Some traders are even letting go of their cargoes before the long holidays," said a China-based buyer.
The buyer said they are now covered by term contracts and might only return to the spot market in April to prepare for the summer season in China.
A north China trader said he procured a Russian origin 5,500 kcal/kg NAR cargo that is now loading on to a ship. The cargo is expected to be delivered in a week's time. He pegged the FOB price of the Supramax cargo at around $60/mt FOB Vanino. Russian thermal coal attracts a 6% import tax in China on a cargo's delivered CFR price.
Market participants in China were also closely watching to see if new import policies emerge in the near term.
"I heard some power plants had been asked to meet the relevant authorities as January's volume had spiked from December," said a south China-based trader.
Several sources expected China's coal imports policy to be unchanged before the key political meetings known as the "two sessions" in March, as authorities will want to avoid any major changes during this period, they said.
KALIMANTAN PRICES
Chinese buyers' lingering interest in March seaborne cargoes of Indonesian thermal coal continues to support the Asia thermal coal prices, market sources said Wednesday.
An Indonesia-based trader said he concluded a trade to China at $33.90/mt FOB Kalimantan for an early February-loading shipment on a Supramax basis.
"There aren't many cargoes available for early-February now," the trader said, "most Chinese buyers are looking at early-March cargoes now."
"The current seaborne prices quoted are relatively high," another Indonesia-based trader said. "I am hearing offers for geared vessel cargoes of 3,800 kcal/kg GAR coal at $29/mt FOB Kalimantan," he added.
Offers for Supramax cargoes of 4,200 kcal/kg GAR coal for February to March loading were heard at $34-$36/mt FOB Kalimantan, while bids were heard at $33-$34/mt.
INDIAN MARKET
India's seaborne market has turned relatively quiet midweek, as traders only heard a handful of bids for low CV coals.
"There is not much buying from India," an Indonesia-based trader said, "there were some activities a few days back, and now it's turning quiet again."
"I heard a bid for a Supramax cargo of 3,000 kcal/kg NAR coal for February at $21.50/mt FOB Kalimantan," an Indonesia-based trader said, adding the price for 3,800 kcal/kg NAR coal appeared too high for Indian buyers.
Based on his experience, he said the Chinese market will usually go soft after the Lunar New Year, while India buyers will begin to secure pre-monsoon stocks from March to May.
