Poor weather at Qinhuangdao and other coal export ports in northeast China have impeded some coal shipments to power plants along the Asian country's coastline, but well-covered Chinese end users were refraining from panic buying in the seaborne market, said traders Tuesday.
Chinese buying interest for imported cargoes of Australian, Indonesian and South African thermal coal has remained at relatively low prices -- at about $83-84/mt CFR for spot 5,500 kcal/kg NAR Australian or South African coal, and $80-81/mt CFR for Indonesian coal of the same calorific value.
Outbound coal shipments from Qinhuangdao slowed to 3.8 million mt in the seven-day period to Sunday and were lower than its inbound railings of 4.4 million mt, after thick fog blanketed the port and led to its closure for 40 hours between Wednesday and Saturday, according to port sources.
The port's closure triggered a substantial rise in Qinhuangdao's coal stockpile to 6.8 million mt on Sunday from 6 million mt a week earlier, said market sources.
The appearance of ice in the Bohai Sea off Qinhuangdao port was also seen by some market sources as a hazard to shipping, but opinion on its impact on Chinese demand for imported thermal coal was mixed among traders.
"I am seeing no impact from the sea ice in China. Chinese inquiries are quite stable, but bid-offer prices [for Indonesian coal] are not matching," said a Singapore-based market source.
A Guangdong-based trader said: "The sea ice won't affect the operation of the ports very badly this year. They are well equipped. They can handle it." Other traders in China agreed a period of severe cold weather could help support coal prices in the short term, but would not be enough to change the market's bearish fundamentals.
China's coal market was still heavily oversupplied in the way it was when domestic prices collapsed in 2008, they warned.
Chinese end-users had too much coal stored away for colder weather in China to have much impact on spot demand, said traders in China.
Many coastal Chinese power stations still have stockyards full of coal, even though temperatures have plunged, and many coastal coal-fired plants were operating at 85% of their generating capacity, local market sources said.
Power plants in China's coastal province of Jiangsu had the lowest stockpile levels with enough coal to last for 17 days' consumption, while in the neighboring provinces of Shandong and Zhejiang average stocks at power plants were equivalent to 23 days' use, and in Guangdong in southern China they were 25 days, a market source said.
SHORTAGE OF INDONESIAN 5,500 NAR COAL
An India-based trader echoed this market view on China's abundant coal stockpiles, and said he did not expect imported thermal coal prices to rise in the near term.
"For [imported thermal coal] prices to go up Chinese will have to buy but their production has gone up," he said. "After winter, we will see a reduction in Chinese demand," he added.
Sources said there was some shortage of Indonesian 5,500 kcal/kg NAR coal, as several miners had sold their available cargoes to South Korea and Taiwan, who were better payers than China.
However, a China-based trader said, citing recent export data, that not many cargoes of 5,500 kcal/kg NAR coal seemed to have been exported from Indonesia.
He said Chinese buyers were willing to pay a maximum of $80-81/mt CFR for this grade of coal, adding that at current offer prices, this provided little margin for traders.
A second Singapore-based trader said that there were not many Indonesian producers who were mining this grade of coal, especially single-mine quality.
"That's why some [Indonesian] miners always command a premium to index-linked prices for these specifications on FOB [basis]," he added.
Offers for 3,800 kcal/kg NAR coal from Indonesian miners were at $40-42/mt FOB, while buying interest was at $39-40/mt FOB, depending on whether it was on a geared or a gearless vessel basis.
Offers from Indonesian producers are at higher prices, a China-based trader said, adding that there was a requirement from three buyers for 40,000-60,000 mt of 3,800 kcal/kg NAR coal at between $38-38.50/mt FOB, but offers are at $39-39.25/mt FOB, he said.
"China is not very interested to buy at the moment, but there are still some who are willing to take positions if they get a good price," he added.
A Guangdong-based trader was talking with Indonesian suppliers to buy some 3,800 kcal/kg NAR thermal coal with an ash content of less than 8% and a sulfur of less than 1% at around $40/mt FOB for delivery in March.
The loading process of cargoes booked by the trader from Indonesian ports has been slow down due to the rainy weather in Indonesia.
"So we are cautious booking prompt vessels from Indonesia," said the trader.
Platts assessed the FOB price of Indonesian 5,900 kcal/kg GAR thermal coal for delivery in the next 90-day period at $72.70/mt, up 20 cents day-on-day, and 5,000 kcal/kg GAR Indonesian coal for the same delivery period was assessed at $57.10/mt, and was down 15 cents on-day.
Indonesian 4,200 kcal/kg GAR thermal coal for loading in the next 7-45 day period was assessed at $39.25/mt FOB, and was down 10 cents day-on-day.
