Coal news and updates

Sellers of seaborne-traded thermal coal grappled with lower buying price expectations from China as domestic offers for Qinhuangdao cargoes slumped on weaker downstream demand, sources said Wednesday.

 

Rising stockpile levels at coal-fired power stations operated by China's six largest power companies have triggered a sudden decline in domestic coal prices, sources added.

 

"They [market prices] started to drop slowly to around Yuan 730-735/mt FOB, but right after last weekend, seeing data with all the inventory in power plants, prices have dropped aggressively," a source in China said.

 

A week ago, China's six largest utility companies had combined stocks of around 10 million mt on February 22, the date of last published statistics on stock levels which are set to be updated on Thursday.

 

"Daily coal consumption rate is still quite low until today, and traders expected industrial workers will only come back to work after the Lantern Festival," a North China-based trader said.

 

Downstream demand for spot shipments was feeble this week, as utilities focused on booking cargoes under term contracts, a North China trader said.

 

Prices for domestic 5,500 kcal/kg NAR coal hovered at Yuan 710-720/mt FOB Qinhuangdao during Asian trading hours, sources said.

 

"Traders are reluctant to take new positions, and some who had taken positions before with higher costs are trying to liquidate these fast," another North China-based trader said.

 

"Prices have started to fall more since Monday, and if power usage does not go up soon, prices will continue to fall," the first market source in China said.

 

Chinese thermal coal producers have also played a part in shipping more thermal coal through to northern ports, including Qinhuangdao, he said.

 

Qinhuangdao port prices for the 5,000 kcal/kg and 5,500 kcal/kg NAR grades are now at their lowest since early January, after spiking to Yuan 770/mt and Yuan 690/mt FOB, respectively, on February 3-5, according to S&P Global Platts prices.

 

A China-based trader said bids for 3,800 kcal/kg NAR Indonesian thermal coal for geared shipment and loading in mid March were around $51/mt FOB.

 

But not much buying was happening at the moment, he said.

 

"Market sentiment is a bit off."

 

There was some interest for lower cv Indonesian grades such as 3,800 kcal/kg NAR and 3,400 kcal/kg NAR, but very limited transactions for the mid- and high-cv coal grades.

 

Chinese buyers were not willing to pay more than $50-$50.50/mt FOB for a 3,800 kcal/kg NAR shipment, an Indonesia-based trader said.

 

It seems buyers were expecting some correction in prices which is why they are treading cautiously, he said.

 

Another Indonesia-based trader said he heard offers for March cargoes of branded 5,000 kcal/kg GAR coal at $75/mt FOB, but there were no immediate counterbids available.

 

A Singapore-based trader said buying sentiment in the market was weakening and he heard a bid from China and India for branded 5,000 kcal/kg GAR coal at $71/mt FOB against offers at $75/mt FOB.

 

"The market is going through a lot of volatility. Both business and consumer confidence is low," a West India-based trader said.

 

Traders are not sure what to do in such a market situation, he noted.

 

The market participants were finding it very difficult to deal with such high prices, he added.

 

NEAT THERMAL COAL PRICE ASSESSMENT RATIONALE

 

S&P Global Platts assessed the Northeast Asia Thermal coal index Wednesday at $108.35/mt CFR Kinuura, Japan, basis 5,750 kcal/kg NAR, with typical ash content of 15% for delivery in the next 15-60 days.

 

Platts assessed the spot price of maximum 23% ash 5,500 kcal/kg NAR thermal coal at $85/mt FOB Newcastle, and the Newcastle 5,500 kcal/kg NAR price on a 20% ash basis at $87.20/mt FOB.

 

Platts used its ash differential for this Australian thermal coal, which has a current market value of 74 cents per 1% ash basis, to derive a price for 5,750 kcal/kg NAR coal with 15% ash at $94.85/mt FOB.

 

Panamax freight from Newcastle to Kinuura was indicated at $13.50/mt, which was added to the Newcastle 5,750 kcal/kg NAR 15% ash price.

 

The above rationale applies to the NEAT coal index assessment, with the associated code: JKTCA00.

 

Source: platts