Competitively-priced cargoes of Indonesian thermal coal added to the downward pressure on Chinese spot prices Wednesday, with a Panamax spot cargo of Kalimantan 5,500 kcal/kg NAR coal heard placed into south China at $83/mt CFR basis, market sources said.
Consequently, the CFR South China 15-60 day forward price for 5,500 kcal/kg NAR thermal coal was assessed by Platts at $83/mt Wednesday, and 50 cents lower day-on-day, while FOB Qinhuangdao prices for 5,500 kcal/kg NAR cargoes loading at the port in the next 7-45 days were assessed at Yuan 513/mt ($81.65/mt), and Yuan 2 lower on the day.
The 70,000 mt cargo of South Kalimantan coal was purchased Tuesday by a Chinese buyer and was set to arrive at Zhanjiang port in China's southern Guangxi province in April, according to a Tianjin-based trader, who estimated that the trader's margin on the deal was only 50 cents.
Indonesian 5,500 kcal/kg NAR coal is currently the standout origin in the Chinese market in terms of price, as Australian, Russian and South African cargoes struggled to win the attention of buyers in China.
An ex-Richards Bay cargo of 5,500 kcal/kg NAR coal offered for spot sale at $83.50/mt CFR for late March loading aroused some interest among Chinese traders, but a Liaoning-based trader said he was only prepared to bid $82-82.50/mt CFR.
High ash Australian coal was offered at $83/mt on a delivered price basis to south China ports for April, compared with $84-85/mt CFR in Monday's Asian trading session.
Handymax cargoes of 5,500 kcal/kg NAR Russian coal were offered into the Chinese market at $84-85/mt FOB, or $91-92/mt on a delivered price basis into southern China, including $7/mt for freight.
"We are interested in Russian thermal coal for its good quality, but current offer prices are beyond our bidding interest," said a Guangdong-based trader.
For Australian high ash cargoes priced on a FOB basis, bids from China dropped by another 50 cents to $1 Wednesday to $71.50-72/mt FOB Newcastle for April and May shipments, though offers were steady at $73-74/mt, as heard through broker Marex Spectron. GlobalCOAL had a bid for an April cargo at $72/mt FOB Newcastle.
South African FOB cargoes of 5,500 kcal/kg NAR coal for April-May were bid at $70.50/mt to offers at $72/mt, through the same broker, and a late-March loading Capesize vessel was fixed for Richards Bay to Qingdao, China, at $12.50/mt, Friday.
Platts assessed the FOB 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 days, at $74/mt, down 40 cents from Tuesday.
Falls in domestic thermal coal prices and a bullish freight market have together made Chinese buyers more restrained in their purchasing behavior for seaborne-traded cargoes. "We don't like booking cargoes far ahead in the current market," said a source at a Shanxi-based trader.
Some cargoes of 5,500 kcal/kg NAR Chinese domestic coal was heard traded at Yuan 513/mt FOB Qinhuangdao port, and excluding local VAT at 17%, said traders in China.
"[Prices are] still falling and I don't see any supportive factor for a rebound," a Shanxi-based trader said.
His trading company had not booked any spot cargoes since January, and was only looking for distressed cargoes that had been rejected by buyers and were already on their way to China, such as a Richards Bay 5,500 kcal/kg NAR cargo heard floating off Singapore last week.
A trader in Singapore said that Chinese demand was mixed. "The mature traders are not buying, and newer ones are inquiring for all kinds of cargo that does not seem to price in," he said.
Industrial production, a key driver of power demand in China and therefore thermal coal demand, has yet to reach levels seen prior to the Asian country's Lunar New Year holiday in February said market sources.
A power plant in China's Guangxi province was running at 60% of its total installed capacity, and stocks at the plant were enough to last for more than a month.
"We may not restock until there is a sign for power demand to rebound," said a manager at the plant.
