The price arbitrage of Indonesian low-calorific value coal kept widening since the middle of last week, and reached a new high since November, as appetite from its main buyers remained sluggish.
The spread of Indonesian 3,800 Kcal/kg NAR coal relative to Chinese domestic coal of same quality hit a new high of 176 yuan/t on November 7, second only to 178 yuan/t on October 31, showed Sxcoal’s calculation.
The comparison was made between CCI 3800 import index and the equivalent grade from domestic 4,500 Kcal/kg NAR coal, on CFR southern China basis.
Chinese power utilities have slowed replenishing after supply woes eased with more domestic mines coming into normal production after the National Congress of the CPC. The continuous low coal burns amid relatively warm weather also dented their buying momentum.
Daily coal burns at Chinese coastal provinces fell 12.8% from the previous month to 1.71 million tonnes on November 3, which was 3.3% lower on the year. Their coal stockpiles posted a quick rise of 28.2% from the year prior, Sxcoal data showed.
China Meteorological Administration forecast this winter will see relatively warm weather in the first half and then cooling temperature in the second half.
With generating units running at low capacity, utilities preferred to take low- or ultra-low-CV coal in recent weeks, but the volume was still not large so far and bidding prices kept declining.
A major power producer awarded tenders for some Indonesian cargoes in a range of 545-1,065 yuan/t CFR with VAT this week, basis 2,800-4,400 Kcal/kg NAR, Sxcoal learned from sources.
Two cargoes of the 3,800 Kcal/kg NAR coal were awarded at 825 yuan/t and 849 yuan/t for two separate plants, sources said.
One Shanxi-based importer said the bid of 830 yuan/t wasn’t taken by a coastal utility on November 7, reflecting prices are still heading down. Some sellers even gave low bids trying to clear stocks, so this week may not see any marked reversal, he noted.
Some importers even gave low bids of 825-828 yuan/t CFR for tenders of Indonesian 3,800 Kcal/kg NAR coal for a power plant in Southeast China’s Fujian, according to a local trader.
“The prices are below the break-even level and for stock clearance,” the trader disclosed. He heard some settlements of the same-CV grade in other markets were $93.7/t FOB.
The prevailing offers for Indonesian 3,800 Kcal/kg NAR coal stayed in a range of $94-95/t FOB on November 8, while the 4,600 Kcal/kg NAR coal at $138/t, with prices varying for different laycans.
“Cargoes with near-term laycans are hard to find buyers recently; foreign miners are unwilling to put far-month cargoes on offer,” an N China-based trading house told Sxcoal.
Indonesian producers’ offers largely stayed resilient despite relatively soft demand, buoyed mainly by limited coal availability amid DMO fulfillments and rainy season .
Note: This article has been exchanged under the article exchange agreement between CoalMint and Sxcoal.
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