A South Korean power utility was active in the spot Australian market Friday, and was close to purchasing at least one Q2-loading Capesize cargo of high ash thermal coal at a price equivalent to $74/mt FOB Newcastle on a 5,500 kcal/kg NAR and 20% ash basis, market sources said.
In a tender that closed Thursday for two Capesize cargoes of 5,700 kcal/kg NAR, maximum 17% ash thermal coal for delivery between April and June, Korea Midland Power was said to have lined up one or two Capesizes of Australian coal from suppliers at $84/mt FOB on a 6,080 kcal/kg NAR basis.
The price converts to $76/mt FOB Newcastle on a 5,500 kcal/kg NAR and 17% ash content basis.
Adjusted to Platts' 20% ash specification for high ash Newcastle cargoes, the offer price level in the Komipo tender works out to about $74/mt FOB on Platts' calculations, using its ash differential assessment for Newcastel coal of 63 cents per 1% ash content.
Commenting on the reported price level in the tender, one trader in Singapore said: "That is a good price for sellers."
Competition between sellers in the Komipo tender was intense, with the amount of coal offered into the tender exceeding the required tender tonnage by a factor of 10:1, or 2.5 million mt of offers to 260,000 mt of business, according to an earlier Platts report.
Platts' specification for its high ash Newcastle 5,500 kcal/kg NAR price assessment allows for the consideration of cargoes with a calorific value of between 5,300 to 5,700 kcal/kg NAR and ash of between 17 and 23%.
Komipo's requirement for April-to-June delivery cargoes was currently at the outer edge of Platts' 7-45 day price assessment window for Newcastle 5,500 kcal/kg NAR thermal coal.
Bids were lower Friday for maximum 23% ash 5,500 kcal/kg NAR thermal coal on globalCOAL, with a Capesize cargo for May loading bid at $71/mt FOB Newcastle, when buying interest for March and April cargoes had stood at $72.50-73/mt FOB a day earlier.
Closer in, fair value for March cargoes of Newcastle maximum 23% ash coal was seen by traders at $74-75/mt FOB basis 5,500 kcal/kg NAR Friday.
There was some Indian buying interest for Newcastle high ash spot coal at $74.25/mt FOB, and March cargoes generally were bid at $74.75/mt to offers at $75.75/mt, and at $75.50-76.50/mt for April, as heard through broker Marex Spectron.
Buying interest for April screen-traded cargoes of FOB Newcastle 6,000 kcal/kg NAR coal on globalCOAL was $1 higher in Friday's Asian trading session at $93.50/mt, to $92.50/mt on Thursday, and offers for April were stable at $95/mt.
The absence of Chinese market participants due to the country's Lunar New Year festival has been keenly felt in the spot market this week, and has left prices largely directionless.
Port stocks in China remain at very high levels, with Qinhuangdao port holding 8 million mt and at Fancheng in southern China which handles imported cargoes stockpiles were 7 million mt, said market sources.
Traders had suggested earlier in the week that a weekend strike by Pacific National rail workers in New South Wales had provided some support to Newcastle prices by tightening up the market, but the strike's impact on the market does now appear to have been short lived.
Platts assessed the price for Newcastle 5,500 kcal/kg NAR thermal coal with a typical ash content of 20%, normalized from 17-23% and for loading in the next 7-45 day period at $76/mt, down 75 cents on the day.
SCANT ACTIVITY
No deals were reported for Indonesian thermal coal on Friday, with few bids and offers being heard in the market as Chinese buyers were absent for the holiday, market sources said.
Indonesian thermal coal for loading in the next 90-day period was assessed by Platts Friday at $75.50/mt FOB for 5,900 kcal/kg GAR material and at $59.25/mt for 5,000 GAR product. Both were stable on the day, as was 4,200 kcal/kg GAR Indonesian coal for loading in the next 7-45 days which was assessed at $41/mt.
A Singapore-based trader said prices for higher calorific value Indonesian coal had little room to rise further as Chinese buyers had the option to choose from several other alternative sources.
He said higher grade coal was abundant from Australia, South Africa and Russia into China.
But prices for low grade Indonesian coal might have further room to rise, he said.
"When the Chinese buyers come back into the market [next week], prices might rise," he added.
