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Indonesian Low CV Coal Prices Show Signs of Firming

 


 

April 8, 2019 - There were further signs that the low calorific value (CV) Indonesian thermal coal market is strengthening after details of deals emerged at higher prices than similar transactions done last week. But trade was muted to an extent, with a large number of market participants travelling to a large industry conference in China this week.


Two late April-loading geared supramax GAR 4,200 kcal/kg cargoes traded today at $38/t in the actively traded GAR 4,200 kcal/kg market. A cross-month late April/early May loading geared supramax GAR 4,200 kcal/kg cargo in comparison traded last week at $37.50/t. Earlier last week a late April/early May Panamax cargo of the same coal traded at $37.75/t, although Argus does not include this vessel size in the index for this type of coal. A smaller 10,000t cargo for loading in April traded last week at $37.65/t, although this was too small for inclusion in the index and fell outside the current May and June 60-day assessment window.


Late April loading geared supramax GAR 4,200 kcal/kg cargoes were offered today at $39-39.75/t, which was broadly in line with levels in the market late last week, when cargoes were being offered in a broader $38-40/t range. Bids are also holding relatively steady at around $37.50/t.


Argus last assessed GAR 4,200 kcal/kg prices on 5 April at $37.29/t, up by 78¢/t from the previous week.


The ICI 4 derivatives market made a typically slow start to the week, with details of firm trades slow to emerge. April ICI 4 contracts were bid at $37/t and offered at $37.90-38/t with Singapore-based brokers. A total of 1.053mn t of ICI 4 derivatives contracts traded last month, taking the total volume to have been cleared on the CME since the contract launched in February last year to around 3mn t.


Trade was limited elsewhere in the Indonesian market. Argus last assessed fob Indonesia prices of GAR 5,000 kcal/kg coal on 5 April down by $1.34/t from a week earlier at $53.17/t. Deals in this market were slow to emerge last week, although a late April Panamax cargo of slightly higher quality GAR 5,100 kcal/kg coal traded at $54/t, with a cross-month late April/early May loading Panamax of the same coal trading slightly higher at $54.75/t.


Despite the recent increase in prices of low CV Indonesian coal, which has in part been driven by Chinese demand, coal consumption at utilities in eastern and southern China's coastal regions has fallen sharply on the back of a sudden rise in temperatures. Coal use at coastal power plants operated by the biggest state-controlled coastal utility operator Huaneng reached 164,000 t/d on 6 April, according to coal industry association the CCTD. This was the lowest level since 13 February.


A 130,000t May-loading cargo of NAR 5,500 kcal/kg coal was offered today in the Australian thermal coal market at $62/t fob Newcastle. This was firmer than a May-loading offer confirmed last week at $57/t fob Newcastle for a 100,000t Capesize cargo.


Argus last assessed the fob Newcastle NAR 5,500 kcal/kg price on 5 April at $56.19/t. A 25,000t May-loading clip was also bid at $57/t fob Newcastle, while a 25,000t June clip was bid at $57.90/t fob Newcastle. But these were too small to fit the Argus index.


Many trading firms in the Chinese market held offers of domestic NAR 5,500 kcal/kg coal steady at around 625 yuan/t fob north China. Some others raised offers to around Yn628/t fob.

 

The Zhengzhou commodities exchange May contract in China's futures market closed at Yn619/t, up by Yn4.60/t from the previous close.