A few Chinese thermal coal buyers were reportedly concluding deals for March-delivered imported shipments, even as most of them were getting ready to wind up for the upcoming holidays, sources said Monday.
A mini-Capesize cargo of Australian 5,500 kcal/kg NAR coal was reportedly sold to a Chinese buyer at $78.50/mt CFR southern China while another mini-Capesize cargo of Australian 5,500 kcal/kg NAR coal was heard sold at $79.75/mt CFR eastern China, both for March delivery.
"These prices are mainstream market prices for March-delivered cargoes," a Singapore-based trader said.
However, some Chinese traders are only looking for distressed cargoes of 5,500 kcal/kg NAR Australian or South African thermal coal at no higher than $78/mt CFR for February deliveries, sources said.
"We have got about 2 million mt of 5,500 kcal/kg NAR thermal coal on annual contracts, so we are now only interested in cargoes priced below market prices, ideally distressed cargoes," a northern China-based trader said.
With the upcoming holidays, deals were difficult to close, sources said.
"Even if we sign import deals now, we may not be able to open letters of credit with local banks," a Shandong-based trader said.
A Capesize cargo of 5,500 kcal/kg NAR Australian coal was heard being offered to a Beijing-based trader at $80/mt CFR for March delivery, but he was unwilling to conclude the deal because of uncertainty about near-term demand.
Utilities in southern China are willing to pay Yuan 560-570/mt CFR, with 17% VAT, for January or February cargoes of imported 5,500 kcal/kg NAR coal.
The price translates to $78.50-$80/mt CFR, down from $84/mt in December.
Chinese traders are having a tough time trying to delay shipments that were booked in December or renegotiate prices due to this steep price fall, a second Beijing-based trader said.
For comparison, Chinese domestic 5,500 kcal/kg NAR thermal coal is now transactable at Yuan 565-575/mt, or Yuan 483-491/mt without VAT, FOB Qinhuangdao Port, unchanged over the weekend. DOWNSIDE SEEN IN DOMESTIC PRICES
However, prices of domestic thermal coal may see further falls over the holidays, market sources said.
A Shanxi-based trader said he expected domestic coal prices for 5,500 kcal/kg NAR coal to drop below Yuan 500/mt FOB, including 17% VAT, in February, citing his company's internal forecast.
"If that's the case, no seaborne cargoes are profitable," he said, adding that he will take a wait-and-see approach until mid-February to gauge the direction of prices for seaborne cargoes.
Currently, 5,500 kcal/kg NAR domestic thermal coal is being traded at around Yuan 560/mt FOB Qinhuangdao, a Shandong-based trader said.
At the close of Asian trade Monday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 568/mt inclusive of VAT, unchanged on the day.
Platts assessed the FOB Qinhuangdao 5,500 kcal/kg NAR coal for delivery in the next 7-45 days at Yuan 483/mt, unchanged on the day.
The CFR South China (CCI 8) price was assessed at $78.50/mt basis 5,500 kcal/kg NAR excluding Chinese VAT, unchanged on the day.
Platts price assessment for cargoes of 5,500 kcal/kg NAR coal for arrival in south China ports in the next 15-60 days stood at $78.60/mt CFR, unchanged on the day.
Typical 20% ash Newcastle 5,500 kcal/kg NAR coal for loading in the next 7-45 days was assessed at $68.25/mt FOB, unchanged on the day. RAINS DISRUPT PRODUCTION
Loading issues at some ports as well as a shortage of cargo availability have supported Indonesian thermal coal prices, although weak demand is still a cause for concern, sources said.
A source at a medium-grade coal producer said that despite falling prices, Chinese buyers were still "performing" on their contracts.
He said Panamax cargoes of 4,600 kcal/kg NAR coal were being quoted at $57-58/mt FOB by suppliers, down about $3-4 in the past two weeks.
"We are still firm on cutting production as demand has been weak. So we do not have many spot cargoes," he said.
A source at a large Indonesian producer said his company has stopped mining for a week due to flooding.
Three Panamax shipments of 6,400 kcal/kg GAR coal were reportedly sold to a Taiwanese end user at $84/mt FOB for deliveries from January to March, he said.
"Our production costs are at about $52-55/mt for any coal that we produce. That's why we try and sell coal above 5,000 kcal/kg GAR," he said.
Elsewhere, a Panamax cargo of 5,350 kcal/kg NAR Indonesian thermal coal with 1.5% sulfur was being offered into the Chinese market at about $65/mt FOB for March delivery.
A Shanxi-based trader said Chinese buying interest for high-sulfur material was muted due to China's tightened air pollution controls.
Platts assessed the daily 90-day prices of FOB Kalimantan 5,000 kcal/kg GAR coal at $56.50/mt and FOB Kalimantan 5,900 kcal/kg GAR coal at $69.80/mt, both unchanged from Friday.
Platts assessed the price of FOB Kalimantan 4,200 kcal/kg GAR coal at $38.05/mt and FOB Kalimantan 3,800 kcal/kg GAR coal at $31.70/mt, both unchanged on the day.
