N. China ports coal prices drop fast on weak demand and rising supply

2017-11-01 17:03:00 Price,  Thermal Coal sxcoal.com

Spot prices of thermal coal traded at northern China's Bohai-rim ports dropped notably in recent days, due to a lack of buying interest from utilities and growing supply as more mines are resuming at production areas.  

Panic selling by some traders also helped driving down prices, reinforcing bearish sentiment toward the near future market.

"Purchases remained sparse at northern ports," said a trader at Caofeidian port. "Most utilities were just waiting for new monthly pricing of the nation's top coal producers.

Shanxi 5,500 Kcal/kg NAR coal with 0.8% sulfur, though offered at 715 yuan/t FOB, was also tradable at about 710 yuan/t FOB, he said. "Prices are likely to further fall back slowly in the short run."

A trader at Qinhuangdao port also confirmed the disparity between demand and supply. "Low buying interest caused by reduced coal burn at power plants was a major factor behind the rapid price slump recently, though bearish sentiment also played a part," he said.

Shanxi 5,500 Kcal/kg NAR coal with 0.8% sulfur was offered at 715 yuan/t FOB, while Inner Mongolia same-CV fuel was offered at 710 yuan/t FOB, compared with bids of 700-710 yuan/t FOB, according to the trader.

"Some utilities made inquiries for Shanxi 5,000 Kcal/kg NAR coal at 610 yuan/t, lower than offer prices ranging 615-620 yuan/t FOB," said the trader.

Despite the tightened supply caused by Daqin railway overhaul, spot coal prices will continue to go down in the short run before stabilizing in mid or late-November, he remarked.

Utilities got more inactive in a downside market, pointed out a Hebei-based trader, not mention the great contraction in their coal burns.

Coal prices have also declined 10-15 yuan/t at major production areas, coastal market prices may further move downward in the near future, he added.

A trader said he sold Inner Mongolian 5,500 Kcal/kg NAR coal at 690-700 yuan/t FOB, and 5,000 Kcal/kg NAR coal at 610 yuan/t at Qinhuangdao port, compared with 615 yuan/t FOB for the same-CV material traded at Jingtang port.

A Tianjin-based trader predicted prices of 5,500 Kcal/kg NAR coal traded at northern ports may soon fall below 700 yuan/t FOB, as offer price of 715 yuan/t FOB was barely accepted by buyers now.

Offer price for Shanxi 5,500 Kcal/kg NAR coal was 710 yuan/t FOB, while that for some Inner Mongolian same-CV cargoes was 700 yuan/t FOB, according to a coal mine source.

On November 1, the Fenwei CCI index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed at 705 yuan/t FOB with 17% VAT, falling 3 yuan/t day on day.

On the same day, the Fenwei CCI index for domestic 5,000 Kcal/kg NAR coal traded at Qinhuangdao port was assessed at 606 yuan/t, FOB basis with 17% VAT, down 4 yuan/t from a day ago and down 22 yuan/t week on week.

(Writing by Tammy Yang   Editing by Harry Huo)
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