Indonesian thermal coal continued to reel from China’s absence in another thinly-traded session, as its price advantage reversed against Chinese domestic cargoes.
Only a 3,800 Kcal/kg NAR Panamax cargo for June delivery was heard concluded at $93/t FOB, sold by a large coal mine based in Kalimantan. The miner often gives offers $1-2/t higher than peers for its good quality and reputation.
Demand from India and South Korea was stable with trading levels close to $90/t FOB for Supramax 3,800 Kcal/kg NAR, while Europe’s buying enthusiasm abated as their stockpiles have improved recently.
Traders in China, the top destination of Indonesia’s coal exports, have been away from the market for a while due to the higher prices.
Indonesian 4,700 Kcal/kg NAR coal has lost its price edge over same-CV Chinese coal for nine weeks in a row. In the latest week ending May 25, the spread was still above 40 yuan/t on CFR south China basis, albeit narrowing gradually in recent weeks.
As for Indonesian 3,800 Kcal/kg NAR, its price edge has only regained this week at 11.14 yuan/t from a 3 yuan/t premium a week earlier.
Chinese domestic thermal coal prices showed signs of falling as poor power demand and high stockpiles weighed on utilities’ purchases. Offers of 5,000 Kcal/kg NAR were seen at 1,080-1,090 yuan/t FOB with VAT, down from 1,100-1,120 yuan/t the day prior.
On May 25, a Chinese state-owned utility invited bids for its fourth overseas tender this month, seeking 576,000 tonnes in 10 cargoes for June/early July delivery with calorific value from 3,000 Kcal/kg to 5,000 Kcal/kg NAR. This includes 140,000 tonnes of coal from Indonesia and 68,000 tonnes from Russia.
The bidding has concluded on the afternoon of May 26, where 3,800 Kcal/kg NAR was generally bid below 800 yuan/t CFR northern ports but around 820-830 yuan/t CFR southern and eastern ports. The CFR bids for southern utilities were generally unchanged compared with awarded prices of the last tender a week ago.
With the Panamax freight at around $14/t from Indonesia to South China and the exchange ratio at 6.74 yuan per dollar, the bidding prices are converted at $93.7-95/t FOB.
Considering the estimated price outstrips the current trading level, the utility may cancel part of buying for a more opportune time, traders noted.
Note: This article has been exchanged under the article exchange agreement between CoalMint and SX Coal.
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