Two trades for mid-calorific value imported thermal coal for delivery to ports in South China were heard in the seaborne market during Friday's Asia trading session, supporting prices, said market sources.
The Platts/Fenwei CFR South China (CCI 8) price was assessed Friday at $76.40/mt basis 5,500 kcal/kg NAR, excluding Chinese 17% VAT, and 10 cents higher than the previous day, while the Platts' only CFR South China price assessment was steady on the day at $76.50/mt CFR.
One of Friday's trades was for a March-arrival Capesize of Australian 5,500 kcal/kg NAR thermal coal struck at between $76.25 and $76.50/mt CFR South China, and the other was for an April cargo of the same origin and calorific value thermal coal at $77/mt, said Chinese traders.
Bid and offer prices for cargoes of 5,500 kcal/kg NAR thermal coal from Australia and South Africa had narrowed over the course of the trading week to a tight band of $76-77/mt CFR South China.
"We are still seeing buying interest at $76/mt CFR South China," said one market participant in Singapore.
In the over-the-counter market, a March-arrival Capesize cargo of Australian high-ash coal for delivery to North China was bid at $77/mt CFR basis 5,500 kcal/kg NAR, and when normalized to South China -- the basis for Platts' assessment -- the price would be about $76.50/mt.
An April-delivery shipment of the same origin and specification was bid at $77.50/mt, and both bids were heard through broker Marex Spectron.
Offer prices heard through Chinese traders included a March-delivery cargo of 5,500 kcal/kg NAR Australian thermal coal at $76.50/mt CFR South China, and an April-delivery 130,000 mt cargo of South African coal at $77/mt on a delivered price basis.
An increase in shipping costs over the week of around $1 on the Newcastle, Australia, to South China trade route has put off some Chinese traders from executing deals for seaborne cargoes.
A Shanxi-based trader said: "Now the cost for a Capesize vessel [on the Australia-southern China route] has gone up to $13/mt, this price does not look competitive anymore." CHINESE TRADER FACES LOSS ON CARGOES
A Beijing-based trader said he was facing a "great loss" on some February-delivery Capesize cargoes of 5,500 kcal/kg NAR Australian thermal coal that he had purchased at about $84/mt CFR eastern/southern China last December.
"We may lose about Yuan 50 for every ton we sell," said the trader, who was trying to renegotiate with his suppliers to minimize his potential loss.
"Utilities can easily default when prices fall but we cannot. We have to perform even if we suffer a loss," he added.
At Qinhuangdao port, Chinese-origin thermal coal had settled into a range-bound trading pattern.
Some 5,500 kcal/kg NAR domestic coal was heard traded at Yuan 540/mt FOB Qinhuangdao port, including 17% VAT, according to a Shanghai-based trader.
"I don't see support for domestic coal prices recovering in the near future," said the trader.
A Shandong-based trader said a rise in coal railing costs and recent colder weather in China could speed up coal consumption at the country's power plants.
"I think now is a good time to take some stocks of overseas thermal coal for sale in Q2," he said.
At the close of Asian trade Friday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 538/mt inclusive of VAT, and was stable on the day.
Platts assessed the price of FOB Qinhuangdao 5,500 kcal/kg NAR thermal coal, excluding VAT, for delivery in the next 7-45 days at Yuan 460/mt, and was also steady day on day.
TRAIN STRIKE THREAT, JAPAN TALKS
The screen-traded market for Newcastle 6,000 kcal/kg NAR thermal coal was active Friday, with three trades going through starting with a 50,000 mt cargo for April loading at $77.20/mt FOB, and followed by two 25,000 mt parcels for June and July respectively at $78/mt on globalCOAL.
A day earlier, a June parcel and July-loading parcel each for 25,000 mt had traded onscreen at $78/mt and $78.30/mt FOB Newcastle, and an August cargo of the same size went through at $78.25/mt.
Market participants pointed to two factors behind the increased activity for Newcastle coal. Firstly, the approach of talks to settle Japanese supply contracts for the financial year starting April 1, and secondly, pending strikes by coal train drivers in New South Wales.
Chinese bids for high-ash (maximum 23%), 5,500 kcal/kg NAR Newcastle thermal coal cargoes steadied to around $64-65/mt FOB, though sellers were seeking $66/mt for this specification of coal, said market sources.
Rising vessel freight costs were squeezing FOB prices at origin ports, and offsetting increased Indian buying interest for this coal in the light of supply shortages for Richards Bay thermal coal, said sources.
Typical 20% ash Newcastle 5,500 kcal/kg NAR coal for loading in the next 7-45 days was assessed at $66.50/mt FOB, and the assessment was steady day on day.
