The price of Australian 5,500 kcal/kg thermal coal with typical 20% ash content was assessed at $71.25/mt FOB Newcastle Tuesday, reflecting stable value after a lower trade seen Monday, said traders.
The assessment remains the lowest in more than two months as China has kept its purchases to a minimum following higher-than-expected hydropower generation in recent months and a higher freight penalty.
One trading source pegged the rate for a Capesize export from Australia's Newcastle port to Southern Chinese ports at "a little above" $14/mt, showing much higher value than last week when it was around $12/mt.
A string of iron ore fixtures in the Asia Pacific region in recent days has tightened the market for Capesize ships, increasing the cost of shipping coal from Australia to China, said traders.
"Freight has gone up and it's squeezing the FOB levels...there's no change in Chinese buying behavior," a trader said. "It feels like $70/mt FOB Newcastle [for a typical 22% ash cargo] is a level that makes sense...generally the market remains under pressure."
Bids and offers were few and far between Tuesday in a market that was quieter than usual due to industry events.
Broker Ginga Petroleum was quoting the market $69.00-70.50/mt for maximum 23% ash coal loading in November and December, and other sources said value remained around the $70.00/mt level for max 23% ash cargoes.
"The market isn't picking up," said a second trading source. "Coastal freight is a bit softer in China but regional Capesize rates are high...so that's not really encouraging imports [into China]."
Discussion continued about Monday's Australian 5,500 kcal/kg thermal coal transaction on globalCOAL, reported to be the second of that kind this year for the broker.
"These guys put a lot of work into it...it's good to see in a lot of respects," said the first trader, referring to this year's increase in traded volumes in the Australian 5,500 kcal/kg coal market.
In the premium market for 6,000 kcal/kg thermal coal, sources put the value of December at $82/mt, unchanged from Monday but up several dollars from last week.
