July 16, 2019 - A total of 30,000t of third-quarter 2019 ICI 4 derivatives contracts traded today but trading activity was scarce in the physical market, with bids and offers softening.

Today's third-quarter 2019 ICI 4 derivatives contracts traded at $34.85/t in 10,000t clips each for July, August and September. Today's trades were cleared on the CME at a marginally higher price than the 51,000t of fourth-quarter 2019 contracts that traded last week in a $34.75-34.80/t range. But the 10,000t July clip traded today was significantly lower than a spot July ICI 4 clip of the same size that cleared on the CME at $35.80/t last week. All of today's trades were brokered by Singapore-based Evolution.

Today's trades mean 169,000t of ICI 4 derivatives contracts have transacted so far this month, taking the total volume cleared on the CME since the contract launched last year to over 4mn t.

Bids and offers in the ICI 4 derivatives market were relatively steady today with different Singapore-based brokers. July contracts were bid at $35.30/t and offered at $35.60-35.75/t, while August was bid at $34.30-34.50/t and offered at $35-35.25/t. September was bid at $34.25/t and offered at $35.10/t, while fourth-quarter ICI 4 futures were bid at $34.25/t today and offered at $34.85/t.

Details of trades in the physical coal market were slow to emerge today amid ample stocks at Chinese utilities and ports.

In the GAR 4,200 kcal/kg coal market, bids and offers appear to have softened compared with last week. Bids for geared Supramaxes for August loading were marginally lower today in a $35-35.50/t range, compared with $35-36/t last week. Offers for this coal were at around $35.70-36.25/t today, compared with $36-37/t for August-loading geared vessels last week. Argus last assessed fob prices of this coal at $35.88/t on 12 July, down by 12¢/t from the previous week.

In the Australian market, a Capesize cargo of late-August loading NAR 5,500 kcal/kg coal was offered at $54/t fob Newcastle. This was in line with offers heard last week, which were in the $53.50-55/t fob Newcastle range. The market was assessed at $52.57/t fob Newcastle most recently on 15 July, up by 61¢/t from the previous week, as some market participants rushed to make trades before Chinese ports used up their import quotas for the year.

In the higher-calorific value market, a 25,000t clip of NAR 6,000 kcal/kg coal for loading in October traded on screen at $76/t fob Newcastle. This was down by $2/t from the most recent trade for coal with those specifications last week. But the trade is too small and not prompt enough to fit the Argus index, which was assessed most recently at $75.74/t fob Newcastle, up by $3.13/t on the week.

In the China domestic market, spot thermal coal prices retreated further today as daily consumption at major power plants remained weak. Market participants pegged the value of domestic NAR 5,500 kcal/kg coal at 605 yuan/t ($88/t) fob Qinhuangdao, down from the Argus assessment of Yn619.50/t fob last week.

Daily consumption at China's six major coastal power plants dropped below 600,000 t/d again to 593,000 t/d as of 15 July, according to data from coal industry association the CCTD. Stocks were sufficient to meet demand for 30 days.

The actively traded September thermal coal futures contract on the Zhengzhou Commodity Exchange closed at Yn581/t today, down by Yn1/t from 12 July. Open interest on the contract was pegged at around 13mn t of potential physical volume for delivery in September.