Asia thermal coal (CCI8): South China cargoes sold to Chinese plants at $64/mt

2014-07-31

A large producer and trader of Australian 5,500 kcal/kg NAR thermal coal was heard Wednesday to have off-loaded a large quantity of this maximum 23% ash fuel to Chinese power plants at $64/mt CFR South China, market sources in Asia said.

Also, the producer-trader in Australia was said by one market source to have placed a significant quantity of its 5,500 kcal/kg NAR high-ash thermal coal into the hands of international trading companies for resale into China, although one company denied this.

Market sources said this would be an unusual move as the producer-trader has traditionally avoided selling its Australian thermal coal directly to competitor trading firms. Cargoes of its coal can be obtained through third parties instead, said a market source.

Coal producers have been forced to drastically lower their selling prices into the seaborne market in recent weeks because of aggressive discounting by major Chinese coal producer Shenhua.

“Bids are being pushed lower. It is getting harder to place cargoes into China, and sellers have got to give an incentive to buyers to take it,” one trader in Singapore said.

But with China sitting on close to 400 million mt of thermal coal stockpiles including quantities held at ports, power plants and mine sites, Chinese buyers are able to bide their time in negotiating with seaborne cargo sellers, said another trader.

CUTS SPECULATION

Rumors circulated that Shenhua was preparing to cut its 5,500 kcal/kg NAR prices by another Yuan 5/mt ($0.80/mt), with an eventual target of Yuan 400/mt FOB Qinhuangdao.

“If that is true, China’s imported thermal coal market will be dead,” said a Shandong-based trader.

August and September-delivery Capesize cargoes of 5,500 kcal/kg NAR thermal coal were heard offered at $65.50-66/mt CFR southern China, to few firm bids, said traders in China.

“Prices higher than $65/mt CFR are not workable,” a Guangdong-based trader said.

A large power plant in southern China’s Guangxi Zhuang Autonomous Region recently bought an August-delivery high-ash Capesize cargo at only about Yuan 465/mt CFR Fangcheng, market sources said.

China’s domestic 5,500 kcal/kg NAR thermal coal traded at Qinhuangdao port at Yuan 460/mt FOB for a blended cargo, with offers heard at Yuan 470/mt for Shanxi single-mine grade, in Asia trade.

INDIA TRADE

An India- based trader heard a deal for a Panamax cargo of Australian 5,500 kcal/kg NAR coal for loading in September sold to an Indian buyer at $55-56/mt FOB Newcastle, and a Singapore trader heard an offer for this month and grade at $55/mt.

“There is nothing sustaining Newcastle prices,” said one market participant.

Some recent firmness in Newcastle 6,300 kcal/kg GAR spot prices was the result of short positions in this origin’s coal derivatives market. “The support for Newcastle is a delayed reaction to European gas supply issues,” said one trader.

“There are lots of short positions in the paper market,” said another Newcastle coal trader.

Chinese bids on August and September-loading high-ash cargoes for loading at Newcastle port were heard at $54.50-55/mt FOB to offers at $55-56/mt, although one trader in Singapore said he would be unable to bid any higher than $53/mt.

At the close of Asia trade, the Platts/Fenwei China Coal Index (CCI 1) for 5,500 kcal/kg NAR domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 468.50/mt inclusive of VAT, down Yuan 1.50 on the day.

The CFR South China (CCI 8) price for 5,500 kcal/kg NAR thermal coal was assessed at $64.70/mt, down 30 cents from Tuesday.

Platts assessed the FOB price of Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20% at $56.25/mt, down 25 cents on day.

Source from : Platts

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