One or two Chinese buyers were ready to pay higher prices for 5,500 kcal/kg NAR cargoes from Australia at $68.50/mt for September delivery and $69/mt for October arrival, partly to beat an October 1 deadline set by the National Development and Reform Commission, said market sources Wednesday.
Market sources said the NDRC is allowing Chinese utilities a grace period of a few weeks in September to fulfill existing cargo bookings before it applies limits to seaborne cargo imports starting October 1.
Reports stating the NDRC is pushing a new policy to restrict import volumes and might impose a 3% tax on thermal coal with ash of more than 15% and a sulfur content above 0.6% brought into China has created market jitters.
"It is hard to see what is going to happen. There is some uncertainty over whether China may apply a tax or not, and Chinese customers are cautious about measures to control imports," said one trader.
In Wednesday's trading session, a seaborne cargo of Australian 5,500 kcal/kg NAR thermal coal was heard offered to Chinese buyers at $69/mt CFR South China for mid-October arrival, said a trader in Shandong. Two trades were heard in the CFR South China market Wednesday and both were for Capesize cargoes of 5,500 kcal/kg NAR Australian thermal coal, one at $69/mt for arrival in October and another for September delivery at $68.50/mt, said market sources.
"The price sounds pretty high, but I heard there is an additional clause to the vessel," a Shanghai-based trader said of the $69/mt CFR trade.
"The buyer requires a new vessel, less than 10 years old, to ship the cargo," he added.
A trader in Singapore reported seeing Chinese trading houses offering seaborne cargoes back to the spot market.
"Normally, they would be stocking up for the winter," he said. Buying interest for 5,500 kcal/kg NAR cargoes for delivery to ports in southern China was heard in the market at lower levels of $67-68/mt CFR basis.
At Qinhuangdao port, domestic 5,500 kcal/kg NAR thermal coal with 0.6% sulfur was heard to trade at Yuan 475/mt FOB, which normalizes to Yuan 471/mt basis 0.8% sulfur, and offers for 0.8% sulfur cargoes were at Yuan 470-475/mt.
At the close of Asia trade, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 471/mt inclusive of VAT, steady on the day.
The CCI 8 price for 5,500 kcal/kg NAR thermal coal was assessed at $68.30/mt, excluding Chinese VAT, 10 cents higher than Tuesday's assessment.
NEWCASTLE 6,300 GAR LOWEST FOR FIVE YEARS
Meanwhile, prices for Newcastle 6,300 kcal/kg GAR thermal coal traded Wednesday at their lowest level for five years. They dropped to $66.50/mt FOB in mid-2009.
Four trades went through the globalCOAL trading platform in Asia trade -- two were for October loading parcels each for 25,000 mt, the first at $67.15/mt followed by one later at $66.85/mt.
Two 25,000 mt parcels for loading in December traded on-screen at $68.10/mt and $67.85/mt FOB.
Lower Newcastle 6,000 kcal/kg NAR spot prices will set a bearish tone for upcoming Japanese negotiations for term contracts that start delivery on October 1.
"For the customer side [low prices] are good, but for the supply side the negotiations are going to be tough," said one trader with links to the Japanese thermal coal market.
In the Newcastle 5,500 kcal/kg NAR thermal coal market, there was a slight upturn in spot prices.
A deal was heard brokered at $57.25/mt FOB for an October-loading 130,000 mt cargo through Marex Spectron in the Asia trading session.
A trader in Singapore said he was offering Australian 5,500 kcal/kg NAR cargoes at $57.50/mt FOB Newcastle, and was thinking of further dropping the price. He placed fair market value for this grade at $57/mt FOB.
Platts assessed the FOB price of Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20% at $58.30/mt, and up 30 cents on day.
