Coal news and updates

Asia-Pacific benchmark coal prices have declined to a three-week low as muted Chinese and Indian import demand pressure the market.

Broker Global Coal’s Newcastle index was assessed last at USD 64.84/t, down 2% from a week ago and the lowest level since 3 September.

Analysts attributed the weakness to continued anticipation of reduced Chinese import demand over the remaining months of the year, with deliveries in January-August totalling 220m tonnes – only 61m tonnes shy of the government-imposed annual quota.

“If they stick with this quota, they can only import 15m tonnes/month until the end of the year [including the current month], so this will be a big factor,” said an analyst with a shipbroking firm.

“China might take much less coal in the remainder of this year, given their import caps,” said a coal analyst with a trading firm, pointing also to restrictions on industrial coal use over the coming weeks, due to smog concerns.

Beijing and the surrounding cities have implemented restrictions on heavy industries, to ensure clear skies during the Chinese capital’s 70th anniversary parade next week, Reuters reported.

“Due to the political event, China is paying close attention to environmental indicators,” said a Chinese coal analyst. “Recently, the air quality does not look good, despite closure, or half closure, of manufacturers,” she added.

In response, front month coal prices on China’s Zhengzhou exchange were down nearly 2% on the week, with a latest settlement at CNY 573.60/t (USD 80.48/t) – the lowest since 2 September.

 

Indian demand

 

Meanwhile, Indian coal import demand was relatively subdued, with stocks at 131 monitored coal-fired plants declining 7% on the week to their lowest since January – of 17.8m tonnes.

This was sufficient for 11 days of power generation.An Indian coal trader said the decrease was due to “lower imports”, rather than heightened generator demand.

“Imports are expected to pick up post monsoon,” he said, regarding the annual rainy period, which generally lasts from June until October and can hamper import operations.

“By mid-October, imports will pick up and [import] contracts will commence,” he noted.

 

Price negotiations

 

On the supply side, negotiations between Australian exporters and Japanese generators continued, for half-year supply contracts, with sources close to the situation claiming discussions were focusing on a price in the mid-70s.

This would be in line with current Cal 20 Ice Newcastle futures prices – with the contract seen last at USD 74.85/t – but well above the physical Newcastle index.

Two November-loading Newcastle cargoes traded on Wednesday, although one was at a USD 3.25/t premium (USD 66/t) to the other.

“[Exporters] are still trying hard to settle September [contract] at way above real physical values,” said a coal analyst with a trading house, noting an agreement in the mid-70s would be “outrageous”.

 

Source: https://www.hellenicshippingnews.com