Indonesian thermal coal prices have received some relief from a slight uptick in Chinese utility tender prices, despite ongoing challenges from subdued demand in the key buyer China, market sources reported.
On 24 June, a power enterprise based in Southeastern China’s Fujian province concluded a new deal for 3,800 kcal/kg NAR coal, receiving bids from Chinese traders ranging between yuan 526.5-535/tonne CFR with VAT, for end July-early August delivery. The prices can be converted into $55-56/t FOB Kalimantan, as calculated by Mysteel based on the exchange rate of yuan 7.3 to $1 and the Panamax freight rate of around $9/t from South Kalimantan to South China.
Sources familiar with the matter said that the power company purchased two Panamax cargoes of 3,800 kcal/kg NAR at yuan 526.5/t and yuan 528/t respectively during this tender, along with one cargo of 4,000 kcal/kg NAR at yuan 556/t, CFR with VAT.
Since early last week, Chinese utility tender prices for July-August thermal coal deliveries had bounced back from lows of yuan 517-518/t, signalling improved price acceptance as expectations rise for higher summer consumption, a Chinese source told Mysteel Global.
As such, the market for Indonesian low-calorific value (CV) coal has stabilised for now, the sources noted, predicting a limited decline in the near term. On the other hand, some analysts cautioned against the likelihood of significant price hikes, citing the ongoing rains in southern China that are filling dams, enabling output of hydroelectricity to increase strongly. This will continue to squeeze consumption of steaming coal for power generation, they said.
Offers for July-loading Panamax 3,800 kcal/kg NAR cargoes were reportedly hovering around $56.5-58/t FOB Kalimantan in the spot market, with deals sealed at $56/t or so, sources said, adding that transactions for Supramax cargoes of the same grade were concluded at around $53/t.
Late last week, a Panamax cargo of 3,800 kcal/kg NAR coal destined for July delivery was reportedly sold to China at $57/t FOB Kalimantan, marking the highest trading price of the week for this grade, against bids ranging from $54-55/t.
Conversely, the high-CV segment saw a Chinese state-owned power group decline an offer of yuan 858/t, CFR with VAT, for seaborne import of 5,500 kcal/kg NAR coal in its latest tender, Mysteel Global learned. This contrasts with domestic prices of yuan 870/t for the same grade at northern China ports currently, suggesting that seaborne coal holds continued price advantages and that the domestic market has the potential to soften.
Sources in the spot market indicated that Chinese buyers sought Australian 5,500 kcal/kg NAR cargoes at yuan 820/t CFR South China with VAT, while suppliers insisted on prices not lower than yuan 850/t to be in line with offers accepted by other countries.
As of 24 June, Mysteel assessed Australian 6,000 kcal/kg NAR thermal coal at $133/t FOB Newcastle port, down $1/t from a day earlier. Meanwhile, Mysteel’s assessment of Indonesian 3,800 kcal/kg NAR coal was at $55/t FOB Kalimantan, unchanged on day.
chenziyi@mysteel.com
Note: This article has been written in accordance with an article exchange agreement between MySteel and BigMint.
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