- China’s 5,500 kcal coal prices fall 4.5% to RMB 630/t
- High stockpiles, volatile costs pressure import market
Mysteel Global: China’s thermal coal import market extended its weak performance on 13 May, with domestic buyers’ interest in overseas coal cargoes remaining subdued due to their lower cost-effectiveness.
Imported thermal coal – typically a more economical option for Chinese coastal power plants compared with domestic supplies transported from the country’s northern ports – continued to lose its edge amid the tumbling prices of domestic portside coal cargoes, according to industry sources.
For instance, Mysteel’s assessment for the benchmark Chinese 5,500 kcal/kg NAR grade dropped by a cumulative RMB 30/tonne (t) ($4.2/t) or 4.5% from end-April to RMB 630/t on 13 May, on FOB China’s northern ports basis with VAT included. This hit a new low since 9 March 2021.
By contrast, prices of Indonesian 3,800 kcal/kg NAR coal stayed flat during the same period at $49/t FOB Kalimantan by May 13, while that of Australian 6,000 kcal/kg NAR coal even rebounded by $4/t to $98/t FOB Newcastle, according to Mysteel’s assessments.
Additionally, greater fluctuations in the Chinese yuan against the US dollar and volatile international shipping rates have caused unstable buying costs for Chinese coal importers and persuaded them to stay on the sidelines in recent weeks.
Sources revealed that the lowest bid submitted by traders for a recent tender issued by a power plant in southern China’s Guangdong province seeking imported 3,800 kcal/kg NAR cargoes was heard at RMB 430/t on CFR basis with VAT and for delivery in late June, notching this year’s lowest level.
Chinese importers who have signed long-term purchase contracts with foreign miners were actively marketing their cargoes domestically, offering lower bids to stay competitive, industry insiders added.
Spot trading for imported thermal coal at China’s southern ports remained relatively cool as well, with the delivery of previous coal orders contributing to most of the market liquidity, Mysteel learnt.
The outlook for China’s import market is still clouded by signs of a weakening domestic market, with insufficient demand and grave stock backlog mainly to be blamed.
As of 13 May, coal stockpiles at China’s eight major northern ports under Mysteel’s survey stood high at 30.8 mnt, up by a substantial 36.9% compared with a year earlier.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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