China is stepping up purchases for seaborne thermal coal to ease domestic supply shortage, which has incurred a widespread power crunch across the country, supporting seaborne coal prices to linger at high levels.
Cargoes of Indonesian 3,800 Kcal/kg NAR thermal coal were offered at $110-115 yuan/t FOB, while offers for 4,200 Kcal/kg, 4,700 Kcal/kg, 5,200 Kcal/kg and 5,500 Kcal/kg NAR grades stood at $145/t, $155/t, $180/t and $190/t, respectively, all for November delivery on Panamax vessels, traders reported on September 28.
A lot of inquiries were heard from Chinese buyers, especially traders that were mainly seeking for November-delivered cargoes, but there were not many translated into deals, given the skyrocketed prices.
“Some traders are doing in a ‘fast-in, fast-out’ way and gambling on continuation of the upswing,” said a Fujian-based trader. “But normally, their volumes are small, buying one or two vessels to take a chance.”
A trade for 4,500 Kcal/kg NAR thermal coal was concluded at $150/t FOB late last week, while 4,700 Kcal/kg NAR thermal coal was sold at $150/t FOB East Kalimantan, according to traders.
In addition to Indonesian coal, China also accelerated purchases from Russia and South Africa.
Market sources reported Russian 5,500 Kcal/kg NAR thermal coal was offered at $140-145/t FOB Vostochny/Vanino, surging by $20/t from the first half of September. Cargoes of this grade were offered at $180-185/t CFR for October/November delivery.
It was also heard that Russian 4,500 kcal/kg NAR coal was quoted at $104-105/t FOB Eastern ports. Certain suppliers are offering additional discounts on coal with high content of impurities, including fluorine. Prices for such products on 4,500 kcal/kg NAR terms are within $90-92/t FOB (about $120-122/t CFR China).
South African 6,000 Kcal/kg NAR prices continued to rally, rising to $184/t FOB as of September 21 against $173/t on September 24. This has come amid China’s robust demand for winter restocking in the context of domestic coal shortage. An unprecedented gas crisis (due to rising prices) in Europe has spilled over into the Asian markets, which is further supporting coal prices, sources said.
China is experiencing a wide power supply crunch, mainly caused by lingering coal supply shortage and robust demand from industrial sectors. In the northeastern provinces, the power crunch has spread from factories to homes.
Jinlin, one of the three provinces in the northeast, urged local power producers to expand coal imports from Indonesia, Russia and Mongolia, while ramping up deliveries from Inner Mongolia and self-production.
China was not along in facing a fuel crisis. Buyers from India, the U.K. and the U.S. are grappling with energy shortage as a rebound in demand outstrips supply. In India, a large number of coal-based power plants are running stockpiles to a dangerous level, forcing the country to receive expensive shipments from overseas suppliers.
This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal
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