The most liquid Indonesian market, the GAR 4,200 kcal/kg (NAR 3,800), stayed on course for a mild recovery this week as bid and trade levels firmed amid tightening supply and some Chinese short covering.
Several cargoes of Indonesian coal of varying qualities were sold to China. One index-relevant October loading GAR 4,200 kcal/kg geared supramax was sold at $38/t, while another cross-month geared vessel was bid at $38/t in response to a slightly higher offer.
A September loading Panamax of GAR 4,200 kcal/kg, which does not qualify for the index, sold to China at $38.75/t, while a cross-month September-October loading Panamax was bid at $38.75/t in response to a marginally higher offer.
At least one large Indonesian producer of GAR 4,200 kcal/kg coal said they had no cargoes left to offer into the seaborne market this year because they needed to meet their domestic market obligation (DMO). They are among a few producers who are now obliged to sell coal to Indonesia's state-run utility PLN in order to meet their DMO deadline by the end of this year.
On the lower calorific value GAR 3,800 kcal/kg market, an Indonesian producer sold two Panamaxes to China today at $33/t each. Both will load around end-September.
Two ultra-low sulphur GAR 3,400 (NAR 3,000) geared vessels also sold today for loading out of Sumatra. One September loader with 0.1pc sulphur sold at $23/t while another for 1-10 October loading with 0.3pc sulphur went to a southeast Asian buyer at a higher price of $25.35/t.
The direction of the GAR 5,000 (NAR 4,700) was less clear, with offers for September Panamaxes at $54-55/t, and unconfirmed reports of GAR 5,100 September 1.2pc sulphur coal changing hands at $54.50-55/t. And a GAR 4,800 kcal/kg September loading Panamax was reportedly offered as low as $48/t.
The Indonesian ICI 4 paper market for GAR 4,200 kcal/kg was quiet today, although at least one broker said he saw bid-offer spreads firming in line with sentiment on the physical market. A trader reported one September bid at $39.25/t for 5,000t compared with an offer at $40.25, and an October bid at $39.50/t for 5,000t against an offer of $40.25/t.
In the Chinese futures market, the September contract on the Zhengzhou Commodities Exchange closed at 628.8 yuan/t today, up by Yn7.6/t from yesterday. But the January contract closed at Yn614/t, down by Yn1/t.
Some Chinese traders kept offers of physical NAR 5,500 kcal/kg domestic coal at Yn630/t fob northern ports today. But a few lowered their offers to Yn625/, partially to compensate for increased storage fees at a key northern port and overall slower demand. Chinese utilities have slashed their bids to as low as Yn620/t fob, expecting overall prices to decline further.
China's major coal handling Caofeidian port in Hebei province in the north of the country today started to reapply charges for the storage of coal if the product remains at the facility for more than 20 days. This could encourage smaller traders to sell coal they have stockpiled at the port more promptly, which could in turn put pressure on prices.
Source: Argus Media
05 September 2018