Prices drifted sideways in the delivered South China cargo market for thermal coal Friday in the absence of any significant buying interest from China, and sellers pondered the next move in a buoyant freight market, market sources said.
Scant movement was seen Friday in bid and offer prices for cargoes of 5,500 kcal/kg NAR thermal coal for delivery to South China in the next 15-60 day period, and spot prices settled at $77.50/mt CFR for a third consecutive day this week, according to Platts' CFR South China price assessment.
October-arrival cargoes of high ash Australian 5,500 kcal/kg NAR thermal coal stayed bid at $77.50/mt to offers at $78/mt. For November, the bid-offer range was $78-78.50/mt the same as Thursday, as heard through broker Marex Spectron.
South African 5,500 kcal/kg NAR cargoes for October shipment to South China attracted bids at $77/mt CFR South China to offers at $77.50/mt, similar to a day earlier, said the broker.
A fixture for a Capesize ship to load 160,000 mt of cargo at Richards Bay coal terminal in South Africa in mid-October for dispatch to China's northern port of Qingdao was heard in the freight market Friday at $21.50/mt.
Vessel chartering rates for Capesize ships are now at their highest for 23 months at an average of $36,300/day on a time charter basis, according to Baltic Exchange data Thursday.
The Baltic Exchange's index of shipping costs for dry bulk commodities touched 1,860 points Thursday, up 2% on the day to its highest level since November 2011.
"Nowadays, Panamax and Capesize vessel freight rates are at similar levels. A few weeks back, there was a difference of about $4 between these two vessel sizes," a Singapore-based trader said.
One Singapore-based trader said current day-rates for ships were unsustainable, and he expected freight rates to start to stabilise towards the end of the month as more vessels come on to the market.
A Panamax fixture was closed at $15,000/day at the end of the week for a voyage between Indonesia and North China, the highest cost fixture he had heard to date, the trader said.
A number of Supramax vessel fixtures were also concluded this week in the range of $12,000-$15,000/day for ships going to India and about $20,000/day for a China-bound vessels, he said.
"A lot of tonnage was cleared last week, so rates are higher this week," the trader said, referring mainly to the Supramax vessel market.
Higher freight rates have cascaded through all vessel classes in the seaborne freight market and were applying growing pressure on FOB prices for cargoes loading at ports in Australia, Indonesia and South Africa.
Bids on high-ash thermal coal cargoes at Newcastle port in Australia slipped to just under $62/mt FOB basis 5,500 kcal/kg NAR for October shipments. Offers for these cargoes were at $62.50/mt, according to broker Marex Spectron, Friday.
For November, cargoes were heard priced at $62.75-63.25/mt at Newcastle port, basis 5,500 kcal/kg NAR, said the broker.
Platts assessed the FOB price of Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20% for loading in the next 7-45 day period at $63.90/mt, down 10 cents from Thursday.
Cargoes of blended Indonesian 5,500 kcal/kg NAR coal -- a competitor to Newcastle 5,500 kcal/kg NAR high-ash thermal coal -- were being offered at about $66/mt FOB, said a trader in Singapore.
Indonesian miners were still holding firm on their offer prices, despite the price difference with Australian cargoes.
"When [Indonesian] miners are hungry, prices will automatically go down," the trader said.
A source at an Indonesian producer said he had sold a 35,000 mt cargo of 4,800 kcal/kg NAR thermal coal with sulfur of about 1.2% at $66.50/mt CFR South China for loading in October.
He was in discussions with a large Chinese power plant to sell a Supramax cargo of 4,800 kcal/kg NAR with 1.2% sulfur at $55.50/mt FOB for mid-October loading, but the agreement had yet to be signed.
"This September has been very quiet. I have not done many deals. It feels like I am on a holiday in the office," he said.
Platts FOB Kalimantan price assessment for 5,900 kcal/kg GAR thermal coal for loading in the next 90 days declined by 30 cents on the day to $68/mt Friday. The rest of Platts' FOB Kalimantan price assessments for Indonesian thermal coal were steady on the day.
