Price changes in seaborne import thermal coal market lagged behind China's domestic market, reflected in the recent weakening of Australian coal as China's domestic prices have already been on the decline since early February.
Foreign miners had upheld their offer prices even as China's domestic market was heading down. This, however, was mainly bolstered by robust demand from other countries.
"The response lag to China's domestic price change makes sense actually," said a central China-based trader. "It'll take some time for the downside to extend into the seaborne import market."
He reported offer price for Australian 5,500 Kcal/kg NAR coal for March-delivery slid to $96/t CFR, partly due to falling domestic prices.
An East China-based trader confirmed a marginal decrease of the same-CV material to $86/t FOB or $96/t CFR, citing tepid buying demand from Chinese utilities and rapid decline of domestic prices.
By contrast, Indonesian coal embraced relatively favorable market, mainly driven by strong demand from India amid rail bottleneck and huge appetite from utilities and cement plants.
A South China-based trader put offer prices of Indonesian 3,800 Kcal/kg NAR coal at $52/t FOB on Supramax basis, noting high prices that Indian buyers offered ($52.75/t FOB for Panamax shipment).
He added the shipping rates also edged up $0.5-1/t in recent days.
"But Chinese import market still lacks vitality with few deals concluded due to tepid buying, " said a second East China-based trader, who however noted some power plants in the region issue tenders for import coal.
Few buyers could strike deals for Indonesian 3,800 Kcal/kg NAR coal at the offer price of $52/t FOB, he added.
A Fujian-based trader stated the prevailing offer prices for the material was at $51/t FOB, and settlement prices around $50.5/t FOB, saying it sort of too high for offer price at $52/t FOB.
"Chinese import coal trades remain largely muted recently; firm prices are mainly held up by international traders amid shortage of the fuel," he added.
Few utilities from China made inquiries or reached any deals for import thermal coal, owing to wide bid-offer spread, said a Zhejiang-based trader. He placed offer prices of Indonesian 3,800 Kcal/kg and Australian 5,500 Kcal/kg NAR coals at $51.5/t and $86-88/t FOB.
"I think prices may not increase greatly in the short run," said the trader. "There will be limited space for demand to grow as output curb at industrial firms during the Lunar New Year holidays only led to a small decline of power load."
The Fenwei CCI Import 5500 index was assessed at $96/t on February 28, CFR southern China ports, dropping $1/t from a day ago and down $2/t from the pre-holiday level.
On the same day, the 4,700 Kcal/kg NAR import coal was assessed at $80.5/t, CFR southern China ports, stable from the day before and up $0.2/t from that before the holiday; imported 3,800 Kcal/kg NAR coal was assessed at $58.2/t, dipping $0.1/t day on day but up $0.9/t compared with the pre-holiday level.
(Writing by Tammy Yang Editing by Harry Huo)
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