Chinese buyers were bargain-hunting in the seaborne market against a backdrop of generally bearish demand and were heard Friday to have snapped up two Capesize spot cargoes of 5,500 kcal/kg NAR coal for $83.50-84.75/mt CFR south China, with a third at $73.50/mt FOB Newcastle, according to market sources.
One transaction was for a late-March arrival Capesize cargo of South African 5,500 kg/kg NAR coal at $83.50/mt on a delivered south China basis that went through Thursday, although this deal was too prompt to be considered for the Platts CFR China price assessment which has a 15-60 day transaction window.
The second China-bound shipment was for an Australian high ash Capesize cargo of 5,500 kcal/kg NAR coal for April delivery at $84.75/mt, market sources said.
"Our utility customers in China have shown little buying interest," one Singapore-based trader said, adding that what small buying interest his customers had was focused on Australian and South African cargoes at $83-84/mt CFR south China.
At this price level, profit margins for Chinese traders would be almost non-existent, he said.
Offer prices for Capesize cargoes of imported 5,500 kcal/kg NAR thermal coal were down by $1-2/mt compared to one week ago at $85-86/mt CFR south China.
However, some cargoes of Australian high ash fuel were heard priced at even lower levels in the Chinese spot market Friday at $83/mt CFR south China ports for April and May loading shipments. "Offers have dropped significantly by about $2-3/mt compared to one week ago," a trader in Beijing said. In the over-the-counter market Friday, bids for Australian high ash cargoes were flat for the remainder of March, and into April and May at $83.50/mt on a delivered China price basis, as heard through broker Marex Spectron. On a FOB fixed price basis a Capesize cargo of maximum 23% ash, 5,500kcal/kg NAR Australian coal for delivery in April was offered at $72/mt, according to a Fujian-based trader.
A May-loading cargo of Australian maximum 23% ash coal was heard traded Friday at $73.50/mt FOB Newcastle in a deal between an Australian coal producer and a Chinese buyer.
Newcastle high ash cargoes were bid at $73.25mt FOB for late March, April and May loading to offers 25 to 75 cents lower than a day ago at $73.75/mt for these months, as heard through Marex Spectron.
Despite lower offer prices for high ash Australian thermal coal, a Chinese trader said he would not make any fresh cargo purchases until the spot market had stabilized.
He foresaw even lower offers in the seaborne market in the coming weeks on suspended purchasing activity from power utilities.
"[Offers of seaborne coal] will continue to fall. We don't see any sign of a recovery," a Jiangsu-based trader said.
A Russian coal producer was heard to have fixed a Panamax vessel to load a 65,000 mt cargo from Vanino port on the Pacific Ocean in mid-March for shipment to China at $8.25/mt, but there were no details of the cargo's FOB price.
Platts assessed the CFR price of 5,500 kcal/kg NAR thermal coal landing at south China ports at $84/mt, and 50 cents higher on-day, and the price for Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20% and normalized from 17-23% and for loading in the next 7-45 days was assessed at $74.60/mt and was down 20 cents from Thursday's assessment. CONSOLIDATION THREAT
FOB Qinhuangdao prices for 5,500 kcal/kg NAR domestic thermal coal were now trading close to the level of miners' production and transport costs, a Singapore-based trader said.
He could not rule out a further slip in Chinese domestic thermal coal prices which were being transacted at Yuan 515-520/mt in Friday's Asian market, and warned a lower move in prices could trigger industry consolidation.
"A further drop in domestic coal prices may force some smaller coal miners out of the industry," a Shanxi-based trader said, adding that larger industry players would approve of such consolidation.
But, the Shanxi-based trader was also expecting seaborne prices to correct further as well.
"I would expect a further slip in offer prices for international coal. In that case, there might be opportunities for import deals to be done," he said.
A trader in Shanghai said he believed China's domestic thermal coal prices would soon settle.
"Yuan 513/mt [excluding VAT] FOB Qinhuangdao might be the rock-bottom for 5,500 kcal/kg NAR domestic thermal coal prices," he said.
Platts assessed the price for 5,500 kcal/kg NAR domestic thermal coal for loading at China's Qinhuangdao port in the next 7-45 days at Yuan 518/mt FOB, and was Yuan 2/mt lower on-day.
