Coal news and updates

Seaborne Australian cargoes that were destined for China are being diverted to buyers in South Korea, and Chinese coal producer Shenhua has cut rail deliveries by 50% this week to its fully-stocked Huanghua port in north China, said sources in the Asia market for thermal coal Wednesday.

 

In another day of thin market activity and low cargo demand, there was another tick down in 5,500 kcal/kg NAR domestic thermal coal prices at Qinhuangdao port to marginally below Yuan 500/mt FOB, and CFR South China seaborne prices moved lower to $68.50/mt.

 

A number of spot cargoes were heard offered up for resale in Chinese currency including a July-delivery Capesize cargo of 5,500 kcal/kg NAR Australian thermal coal at Yuan 495/mt CFR southern China, and an August arrival cargo of the same origin and grade at Yuan 505/mt.

 

"The offer price is surprisingly low," a Shandong-based trader said about these resale cargoes. "Some buyers are suspicious about the reliability of the quality of the material and the credit of the seller," he added.

 

A trader in Beijing said: "Our utility customers are only paying Yuan 490/mt CFR including 17% VAT [$68/mt excluding VAT] for 5,500 kcal/kg NAR imported material. We can wait until the market stabilizes to take new cargoes." AUGUST CARGO HEARD TO TRADE CFR

 

An August arrival Australian high-ash cargo was reported to have traded at $59/mt FOB, or $69.50/mt on a delivered China basis 5,500 kcal/kg NAR, and traders in China remarked the price was slightly higher than market levels.

 

"The price is a bit on the high side considering the current market situation," a Liaoning-based trader said. "The buyer seems to be in a hurry to grab an August-delivery cargo."

 

Chinese bids on August-delivery cargoes of 5,500 kcal/kg NAR Australian thermal coal were heard as low as $67.75/mt CFR southern China, through broker Ginga Petroleum, to offers at $68.50-69/mt CFR.

 

Elsewhere in the market, August arrival cargoes of 5,500 kcal/kg NAR Australian thermal coal attracted buying interest and bids at $68/mt CFR South China to offer prices at $68.50-69/mt.

 

The prospects of a recovery in delivered South China prices is only likely when buyers begin to match sellers' offer prices, but there are few signs that this is going to happen soon, said one trader.

 

Maximum 23% ash cargoes for loading in August at Newcastle port were attracting buying interest at $57/mt FOB to offer prices at $58/mt from traders and at $59/mt from Australian coal producers, said market participants.

 

Sellers of Australian 5,500 kcal/kg NAR thermal coal, particularly traders, are showing a preference for sales on a delivered China price basis as opposed to a FOB basis.

 

This is because CFR prices are seen as providing slightly better profit margin on present Capesize vessel freight from Newcastle to South China of around $9/mt, said traders. QINHUANGDAO CARGO TRADES AT YUAN 500/mt FOB

 

Meanwhile, China's domestic 5,500 kcal/kg NAR thermal coal was heard offered for loading in the next 7-45 days at Yuan 500-501/mt FOB, traded at Yuan 500/mt, and had buying interest at Yuan 495/mt, said market sources in China.

 

At the close of Asia trade, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 499.50/mt inclusive of VAT, and down Yuan 0.50 on day.

 

The CFR South China (CCI 8) price was assessed at $68.50/mt basis 5,500 kcal/kg NAR, excluding Chinese VAT, and was 15 cents lower than the previous day's assessment.

 

Platts assessed the FOB price of Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20% at $60.20/mt, and steady on day.

 

Source: Platts