Negative sentiment over large Chinese coal producer Shenhua's decision to cut its domestic coal prices mid-week permeated the Indonesian thermal coal market Friday leaving a wide bid-offer price gap for cargoes, sources said.
An Indonesia-based source for a Chinese trading company said it received an offer for a spot Panamax cargo of 4,700 kcal/kg NAR at $56/mt FOB, but he said its buying interest was only $53.50/mt FOB.
An August-loading Supramax cargo of jetty blended 4,700 kcal/kg NAR was offered at $52.50/mt FOB, and bid from a large Chinese buyer came in at $51/mt FOB, as heard through broker Marex Spectron.
A mid-July loading Panamax cargo of single-mine 5,000 kcal/kg GAR was also offered by a western trader through the same broker at $54.50/mt FOB, versus bid at $53/mt FOB.
A Guangdong trader said a July-delivery gearless Panamax cargo of 4,700 kcal/kg NAR Indonesian thermal coal was offered at $54.50/mt FOB, but Chinese bidding interest was only about $52/mt FOB.
"We would not consider July-delivery cargoes of 4,700 kcal/kg NAR Indonesian thermal coal priced above $60/mt CFR," he said, adding that the bid-offer spread had remained wide for low and mid-CV Indonesian coal.
In reaction to the lower Chinese bid prices for this grade, a large low-cv Indonesian producer said: "It would be a challenge to sell at these levels."
He said he did not expect much of a price drop on the Indonesian producers' side as they were already seeing narrow profit margins.
He said Shenhua was the only Chinese coal producer to have dropped its domestic prices this week.
"I haven't heard of any reduction in prices from other traders or suppliers," he added.
The Indonesian producer said it had sold 3,800 kcal/kg GAR and 4,200 kcal/kg GAR on a one-year contract basis at $34/mt FOB on a geared basis and at $39.50/mt FOB also on geared basis, respectively.
An Indonesia-based trader said it had bought a geared Supramax cargo of 4,200 kcal/kg GAR at $37.15/mt FOB, and it is now loading and bound for India.
This source said he saw more cargoes moving to India compared to China, but meeting India's bid prices remained a challenge.
"We still need to sell one more Panamax cargo for July," he said, adding its offer price was around $38.75/mt FOB, but Indian buying interest was $36.50/mt FOB on a geared basis.
Another low-cv Indonesian producer said they sold two geared Supramax cargoes of 4,200 kcal/kg GAR two months ago at $38/mt FOB for loading in early- to mid-July.
He said offer price for a geared Supramax cargo of 3,800 kcal/kg GAR was $32/mt FOB.
A 65,000 mt, gearless cargo of single-mine 3,800 kcal/kg NAR -- 4,200 kcal/kg GAR -- for end-July loading was offered at $37.25/mt FOB, and bid from a Chinese trader was at $36/mt FOB, as heard through broker Marex Spectron.
The Indonesia-based trader said he was also bearish on Indonesian 5,800 kcal/kg GAR coal as "Qinhuangdao prices are depressed and Australian 5,500 kcal/kg NAR coal prices are at lower levels."
Platts assessed the price for 4,700 kcal/kg NAR thermal coal (CCI 7) delivered to ports in South China in the next 30-60 days at $59.60/mt, down 10 cents on day.
Platts assessed the price of FOB Kalimantan 4,200 kcal/kg GAR coal at $36.75/mt and FOB Kalimantan 3,800 kcal/kg GAR at $31.00/mt, both unchanged on day.
Platts also assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $53.50/mt and FOB Kalimantan 5,900 kcal/kg GAR coal at $66.20/mt, both unchanged on day.
