Indonesian thermal coal has regained its price advantage following the recent rise in China’s domestic coal market, traders said, but Chinese demand may remain flat in the near term.
Indonesian cargoes began to show some price edge after the recent rally in the Chinese domestic market, a Guangdong-based trader said. However, he said the Indonesian prices have also increased last week.
Sxcoal’s price analysis showed Indonesian 3,800 Kcal/kg NAR was some 40 yuan/t cheaper than Chinese domestic equivalent on June 9, compared with 17 yuan/t a week earlier, while Indonesian 4,700 Kcal/kg NAR coal remained 30 yuan/t higher than same-quality Chinese coal. The comparisons are based a CFR Guangdong basis with VAT.
Chinese demand has increased recently as some traders need to be ready for utilities’ July delivery. Driven by the demand as well as weather-induced supply tightness in Indonesia, Indonesian coal prices rose moderately last week.
A Beijing-based trader reported a deal concluded at $91/t FOB late last week on Panamax vessel for July delivery. An Indonesian 3,500 Kcal/kg NAR cargo was concluded at $79/t FOB.
China’s demand, however, is likely to retreat again, as heavy rains in South China would weigh on coal consumption. Moreover, coal stockpiles are high at ports such as Guangzhou, and have limited room for more arrivals.
A Guangdong-based utility source noted its vessel has been sitting idling for more than 10 days. “In this case, many traders now need to lock the demand with utilities and then find cargoes from Indonesian suppliers, not the other way around unless they have signed long-term agreements with them,” he said.
A Korean buyer bought an Indonesian 3,800 Kcal/kg NAR Panamax cargo at $93/t FOB last week.
Russian coal prices increased last week, wiping out its price advantage against Chinese domestic coal, a Fujian-based trader said.
As of June 13, Fenwei CCI Import 3800 index, gauging Indonesian 3,800 Kcal/kg NAR thermal coal prices, was assessed at $103/t CFR China, up $1/t from a week earlier; the CCI Import 4700 index also increased $1/t on the week to $150/t.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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