A Chinese state-owned power producer awarded several Russian thermal coal cargoes in its latest tender issued on May 16 at prices lower than Indonesian comparable goods, sources said, which may dent the potential growth of Indonesian thermal coal prices.
The utility awarded two Russian 3,800 Kcal/kg NAR cargoes at 808 yuan/t CFR North China with 13% VAT, netting back to $85/t FOB Sakhalin. This compares current prices of Indonesian 3,800 Kcal/kg NAR coal at $90/t FOB for Supramax vessels and $94-95/t for Panamax vessels.
The utility also awarded Russian 4,500 Kcal/kg NAR thermal coal at 988 yuan/t and 5,000 Kcal/kg NAR at 1,120 yuan/t, both on CFR North China with VAT, sources said. Chinese buyers have scarcely bought any Indonesian high-CV thermal coal in recent weeks due to its lack of price edge against Chinese domestic coal.
Shipping rates, on a Supramax basis, were respectively at $15.25/t from Sakhalin to Dalian, $14.9/t to Yingkou, $14.6/t to Rizhao, $15.2/t to Yuhuan and $16.9% to Dandong, sources said.
China’s utilities have showed higher interest in Russian coal since both parties managed to work out the settlement method. One Russian miner said they are handling deals with Chinese counterparts through cross-border RMB settlement system. While giving Yuan-denominated offers, he said many others are still based on USD as T/T payment through the system has strict cash flow requirements and higher financial cost.
Chinese utilities are geared to the summer restocking, with several power plants floating tenders this week. On May 17, A Fujian-based utility awarded an Indonesian 3,300 Kcal/kg NAR cargo at 668 yuan/t and another two cargoes for 3,800 Kcal/kg NAR coal at 814 yuan/t and 802 yuan/t, respectively. A day ago, another Fujian-based utility concluded a cargo at 822 yuan/t basis 3,800 Kcal/kg NAR.
Sentiment was a bit weak in the Indonesian thermal coal market, as India became resistant of high prices. “While Indian buying remains strong, they are trying to press the price down as much as possible and rejecting big premiums,” said a Beijing-based trader.
He heard the highest trading record into India last week was $142/t FOB for 4,600 Kcal/kg NAR thermal coal.
The Indonesian market, however, was still supported by strong coal prices in other major markets. As of May 18, Newcastle coal futures consolidated above the $400/t mark and just $20/t shy of its record high set in early March, supported by continued robust demand vis-a-vis tight supply.
Recovering demand from China, the top destination of Indonesian coal exports, along with the gradual lift of COVID-19 lockdowns, would also inject momentum to the market.
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
Leave a Reply