Asia-Pacific benchmark coal prices have shed most of this week's gains as concerns about waning demand began to reassert themselves against September 16's spike in oil prices.
Global Coal's Newcastle index last settled at $66.09/t, up 1% in the week through to September 19, though 34% below where it began 2019
On September 16, the Pacific basin's reference price for high grade (6,000 kcal/kg) Australian coal exports to Asia touched a one-month high of $68.04/t.
"All energy took a leg up and calmed down a bit this week," said Vivek Dhar, commodities analyst for Australia's Commonwealth Bank in Melbourne.
Focus was returning to local coal dynamics, Dhar said, as Saudi oil output rapidly normalised after last weekend's attack on infrastructure that temporarily knocked out 5% of global capacity, sending the oil market – a key driver for other commodities – soaring.
China's remaining appetite for coal imports this year was one of the chief concerns now for the regional seaborne market, said Dhar.
The country's high imports so far this year – spurred by cheaper international prices over domestic supply – were posing a growing problem for government ambitions to limit imports to around last year's volume.
By the end of August, China had already imported 220 million tonnes of coal relative to last year's total of 281m tonnes.
"What has happened has definitely irked policymakers in China," said Dhar. "That puts a lot of pressure on coal imports for the end of the year."
At least two northern ports – Qinzhou and Fangcheng – had already imposed additional customs delays, he said, with a chilling effect on imports likely to gain in the coming months.
The bank last expected Newcastle coal to average $70/t over the fourth quarter, with "downside risks" if import restrictions intensified.
Japan's imports slump
Higher temperatures in southern China continued to keep coal consumption there elevated for the time of year at around 700,000 tonnes per day, or about 14% above last year's level, according to a report by Xinhua news.
Prices on China's Zhengzhou exchange were relatively flat on the week at 582.80 yuan/t ($82.10/t).
Japan this week also revealed a sharp drop in thermal coal demand in August, as imports tumbled 20% year on year.
So far this year Australia's main customer for high value coal has seen its imports trail 2018 volumes by 4%, swelling miners' need to find other markets as production has expanded.
Newcastle coal stocks fell by roughly 310,000 tonnes to 1.78 million tonnes in the week through to September 15, according to port data. There were nine vessels waiting to take delivery, down from 11 last week.
(Writing by Tammy Yang Editing by Jessie Jia)
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