A further relaxation in vessel freight rates allowed prices for high ash Newcastle cargoes for loading at the Australian port in the next 7-45 days to creep up slightly, Friday, said market sources.
Platts assessed the price of Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20%, normalized from 17-23%, and for loading in the next 7-45 day period at $70.50/mt FOB and up 35 cents on-day.
Cheaper freight rates did draw some Chinese buyers on to the market for Newcastle high ash coal, however, it remains the case that power utilities in China are overstocked, and many have no urgent need to buy seaborne cargoes. "Lower freight helps buyers. Though I sense buying interest from China is decreasing," said a trader.
A sudden rush of buying interest was not expected to emerge from China by this market participant.
With abnormally high stocks at ports and power plants in China, buyers and end users in the country have first to consume their stocks at hand, before they can move on to place fresh orders for cargoes.
If this de-stocking process lasts long into December or even January, there are fears that Chinese buyers may not return to the spot seaborne market in significant numbers to replenish their supplies until after February's Lunar New Year festival, said market sources.
China's Lunar New Year holiday marks the low-point in terms of market activity and coal sales in the annual calendar.
"In a normal year, Chinese buyers would have booked their winter cargoes in October for loading in November, and arrival in the second half of December," said a trader. CAPESIZE FREIGHT RETRACES
A Capesize vessel with capacity for 170,000 mt of coal cargo was booked Friday at $10.50/mt to sail from Queensland's Dalrymple Bay coal terminal in mid-November to Qingdao port in north-eastern China, according to shipping sources.
A similar-sized ship had been booked for the same voyage -- Dalrymple Bay to Qingdao -- at $12/mt two weeks ago on October 29, also for loading at the Queensland coal terminal in mid-November.
Newcastle port is located 900 nautical miles to the south of Dalrymple Bay terminal and this distance would add about $1/m to freight costs for a ship traveling from the Queensland facility to Qingdao.
This would make Friday's shipping rate for the Newcastle to south China run at about $11.50/mt for a Capesize vessel, according to Platts calculations.
"Chinese buyers are starting to increase their bids, and demand is strengthening for December cargoes on easing freight rates," said another market source.
In Friday's trading session in Asia, buyers in the spot market were expressing more interest in Newcastle 5,500 kcal/kg NAR cargoes on a delivered price, as distinct from a FOB basis.
A Capesize cargo of Newcastle high ash thermal coal for November delivery was bid in the market at $81/mt CFR China, and similar to levels earlier in the week.
An offer was heard through Marex Spectron for a Capesize of high ash Newcastle thermal coal for loading in the second half of December at $84.50/mt CFR China. The broker was understood to have bids on a FOB basis for Newcastle 5,500 kcal/kg NAR thermal coal with maximum 23% ash for December loading at $71.25/mt, Friday.
Maximum 23% ash Newcastle thermal coal was bid at $83.50/mt CFR China through globalCOAL to offers at $84/mt for December loading, and Friday's bid was 20 cents higher than Thursday's level.
The trading platform also had an offer for the same month of 5,500 kcal/kg NAR Australian coal at $71.25/mt FOB Newcastle.
Aside from China, there was some new buying interest in the Asian seaborne market from Taiwan.
End-user Formosa Plastics ventured into the spot market, possibly drawn by lower FOB and easing freight prices, and asking sellers to fill several tenders for thermal coal ranging from 5,700 to 6,000 kcal/kg on a gross as-received basis.
Formosa Plastics is looking for 680,000 mt of imported coal for shipment in the first quarter of 2013, and an additional Panamax cargo for arrival between late November and the end of December, according to market sources.
