Newcastle high-ash thermal coal cargoes find little favor with Indian buyers

Newcastle high-ash thermal coal cargoes find little favor with Indian buyers

Newcastle high-ash thermal coal cargoes find little favor with Indian buyers

Buying interest from India for Australian 5,500 kcal/k NAR thermal coal was minimal, after bids from China slumped to levels in the low $60s/mt FOB, market sources said Friday.

“Buyers [are] on the sidelines as prices continue to fall,” one market source said Friday, commenting on the state of China’s seaborne market, and adding he had not heard of any trades in past days for Australian high-ash cargoes.

Part of the reason for the lack of trading activity in the Australian high-ash market is the widening gap between bids and offers, he said.

Bids for Australian high-ash cargoes ranged between $60/mt and $63/mt FOB Newcastle, for August loading against offers for this grade in the high $60s/mt, basis 5,500 kcal/kg NAR, sources said.

A day earlier, bids for August-loading cargoes of Australian 5,500 kcal/kg NAR thermal coal were heard at $63-$64/mt FOB Newcastle, sources said.

“Indian buyers are looking for Australian 5,500 NAR coal. However, there is a somewhat limited amount that can be consumed due to quality restrictions,” another market participant said.

Australian high-ash thermal coal has a landed price of $77.50-$78.50/mt CFR into India, west coast basis, which is $19.50-$20.50/mt lower than South African 5,500 kcal/kg NAR product at $98/mt CFR west coast India, S&P Global Platts calculations showed.

PRICE GAP WIDENS FOR NEWCASTLE GRADES

Market participants continued to debate the widening gap between prices for different grades of Newcastle thermal coal, namely the 6,000 kcal/kg NAR specification shipped to Japan and Newcastle 5,500 kcal/kg NAR coal used by China.

The price gap has now reached $56/mt, which sources in the market said is historically high, and some believe that a correction in this market anomaly is overdue.

“I think Newcastle 6,000 kcal/kg NAR will eventually have to give up its current strength given Chinese demand is so weak,” a market participant said.

“Prices of 5,500 [are] falling rapidly, and semi-soft is now likely pricing in at, or below, Newcastle 6,000 NAR thermal coal as the coking coal complex has weakened,” he added.

Some Australian coal producers were understood to be averse to selling Newcastle 5,500 kcal/kg NAR product at such a large discount to Newcastle 6,000 kcal/kg NAR thermal coal prices, and so they have been purchasing 6,000 kcal/kg NAR Newcastle product to blend with 5,500 kcal/kg NAR cargoes, sources said.

“They’re doing everything possible to not sell into the discounts,” he added.

CHINESE DOMESTIC PRICES STABLE

Qinhuangdao port prices for Chinese domestic thermal coal were mostly steady in Asian trade Friday, after tumbling earlier in the trading week.

A China-based trader pegged fair market value for domestic 5,500 kcal/kg NAR coal at Yuan 610/mt FOB Qinhuangdao.

An Indonesia-based trader said Indonesian lower CV thermal coal prices were seeing a meltdown.

He pegged the Indonesian 4,200 kcal/kg GAR coal price on a Supramax basis at $41/mt FOB; 5,000 kcal/kg GAR coal at $58.75/mt FOB; and 3,800 kcal/kg GAR coal at $34/mt FOB.

“There’s a lot more offers than demand, frankly. I am like a kid in a sweet shop at the moment” he added.

A Singapore-based trader said offers for August-loading geared-vessel shipments of 3,800 kcal/kg NAR — 4,200 kcal/kg GAR — Indonesian thermal coal have fallen to around $42.50-$43/mt FOB this week.

“There are many offers, but a lack of bids,” he added.

There is a price difference of $8-$10/mt between the 3,400 kcal/kg NAR and 3,800 kcal/kg NAR grades of thermal coal, he said.

Offers for geared-vessel cargoes of 3,800 kcal/kg NAR thermal coal for end-August loading were at $42-$43/mt FOB Kalimantan, other sources said.

An Indonesia-based producer source received a bid for a prompt Supramax shipment of 3,400 kcal/kg NAR coal at $34-$34.50/mt FOB, while his offer was at $36/mt FOB.

“The current coal stocks at the Chinese ports or the utilities will last until the end of the month,” he said, while expecting demand to pick up in September.

Another Singapore-based trader he received an offer for a mid-August loading Supramax shipment of 3,800 kcal/kg NAR coal at $42.50/mt FOB Kalimantan.

Manjula

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