Chinese inquiries for imported thermal coal have picked up amid stabilizing domestic prices and lower freight rates, but a wide bid-offer spread continues to deter spot deals, sources said Tuesday.
Australian suppliers have raised their offer prices for 5,500 kcal/kg NAR coal as freight rates have softened in recent days, sources said, adding that deals were few and far between.
A May-delivered mini-Capesize of 5,500 kcal/kg NAR Australian thermal coal was heard to have been sold at $64/mt FOB, or about $75.50/mt CFR southern China, according to a China-based trader.
An Australian producer was heard offering a Capesize cargo of 5,500 kcal/kg NAR Australian coal for May delivery at $64/mt FOB, according to a Beijing-based trader. With Capesize freight rate of $12/mt from Australia to south China, delivered prices translate to about $76/mt CFR, he noted.
Three weeks ago, the same supplier was offering May-delivered cargoes at as low as $61.50/mt FOB, he said.
"Capesize freight rates on the Australia-south China route were at about $15/mt at that time," he added.
However, his buying interest is only at $73/mt CFR for this grade, he said, adding: "I don't see any opportunity for importing thermal coal."
A Shandong-based trader was offered 5,500 kcal/kg NAR imported coal at $64-64.50/mt FOB, or $76-76.50/mt CFR, for May delivery.
"There is still a spread of $1-1.50/mt between offers and bids," he added.
OUTLOOK BLEAK
The trader was not very optimistic about the Chinese demand for imported thermal coal in the near term.
"There is no stimulus plan to boost [the Chinese] economy. Electricity demand can't be very big this year," he said.
A May-delivered cargo of 5,500 kcal/kg NAR Australian coal was offered at $76.50/mt CFR southern China but Chinese bids were only about $63/mt FOB, or about $75-75.50/mt CFR, a Singapore-based trader said.
"Net advantage for imported coal is still not much in the Chinese market," a second Singapore-based trader said.
Capesize cargoes of higher-ash Newcastle 5,500 kcal/kg NAR coal were offered at $65/mt FOB for May and June loading, while bids were at $64/mt FOB, as heard through broker Marex Spectron.
On a delivered basis, Capesize cargoes of Newcastle 5,500 kcal/kg NAR coal for May arrival were offered at $76/mt CFR Liuheng via the same broker.
The Singapore-based broker, Starfuels, was offering May loading Capesize cargoes of Newcastle 5,500 kcal/kg NAR coal at $64.25/mt FOB.
"Trading and broking has become very difficult currently as miners are approaching end-users directly," a Singapore-based broker said, adding that sentiment at the recently concluded industry event in Shanghai was bearish.
A second Singapore-based broker said Capesize cargoes of May-loading Newcastle 5,500 kcal/kg NAR coal were being offered at $76.50/mt CFR south China, but counter bids were not immediately available.
DOMESTIC PRICES STABLE
Some smaller Chinese suppliers of 5,500 kcal/kg NAR are still selling at Yuan 520/mt [$83.60] FOB Bohai ports, while larger suppliers are offering such coal at Yuan 530/mt FOB, according to a second Shandong-based trader.
A 30,000 mt cargo of China?s domestic 5,500 kcal/kg NAR coal was offered at Yuan 525/mt, or Yuan 449/mt without VAT, FOB Qinhuangdao Port, but a second Shandong-based trader noted that downstream buying interest is at only about Yuan 515-520/mt, or Yuan 440-444/mt without VAT, FOB Qinhuangdao Port.
Spot domestic 5,000 kcal/kg NAR thermal coal at a Changjiang River port is offered at Yuan 510/mt or Yuan 436/mt without VAT FOB. After the deduction of coastal freights of about Yuan 30/mt and port service fees of about Yuan 30/mt, the price of Yuan 510/mt FOB Changjiang River port will translate to only Yuan 450/mt, or Yuan 385/mt without VAT, FOB Qinhuangdao Port.
At the close of Asia trade Tuesday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 522.50/mt inclusive of VAT, up Yuan 1 from Monday.
The CFR South China (CCI 8) price was assessed at $75.95/mt basis 5,500 kcal/kg NAR, excluding Chinese VAT, steady on the day.
