China's portside thermal coal prices stable; Indonesia coal demand up International,  Thermal Coal 2023-03-16 17:51:27

Thermal coal prices stayed stable at northern China ports for the fourth consecutive day, with no clear trends formed, leaving both sellers and buyers to sit on the sidelines for more clues.

On March 16, cargoes of 5,500 Kcal/kg NAR thermal coal were mainly offered around 1,130-1,160 yuan/t FOB with VAT at northern China ports, compared with 1,130-1,170 yuan/t a day earlier. Offers for 5,000 Kcal/kg NAR coal were 960-990 yuan/t, flat from a day ago, and 4,500 Kcal/kg NAR offers ranged 830-860 yuan/t, also unchanged.

The overall buying interest was patchy in the market, and the trading liquidity still in stagnancy. Only a few trades were concluded today, including one concluded at 865 yuan/t FOB for a Shanxi blended 5,000 Kcal/kg NAR cargo with 0.7% sulfur, which was far below the normal tradable level and unsuitable for price reference.

Cement producers, from whom traders earlier this week expected more purchases, were muted collectively, with desire to take bargain buying in anticipation of a price decline.

Utilities also ceased buying due to steady long-term contract supply. A state-run mining group is expected to provide contract supplies to power plants as per delivery rate up to 120% in the first quarter to catch up with its sale schedule, which will weigh on utilities' spot demand.

A Zhejiang-based utility source also mentioned the recent price slump in global commodities added to the negative sentiment for the domestic market.

A Hebei-based trader noted inquiries faded and were mainly limited to 5,000 Kcal/kg NAR, with some buying interests about 30 yuan/t lower than prevailing offer prices.

However, sellers were not panic to sell cargoes. Instead, many of them held back on sales to wait for prices to rise again, which led to limited availability of high-quality cargoes at ports.

"We are not going to cut prices to drag customers back," said a Caofeidian-based trader, citing high cost for its previously-arrived shipments. "Not many traders are willing to sell at a loss." Some traders considered selling to large mining groups if hard to find buyer in the spot market.

On March 15, 5,500 Kcal/kg NAR thermal coal traded at Qinhuangdao port was assessed at 1138 yuan/t FOB with VAT, flat from a day ago. The 5,000 Kcal/kg NAR grade was at 968 yuan/t, up 4 yuan/t from a day ago, and the 4,500 Kcal/kg NAR grade was at 833 yuan/t, unchanged.

Seaborne purchases up ahead of Ramadan

Indonesian thermal coal prices continued to rise on March 16 amid active tender invitations by Chinese utilities to avoid potential supply reductions caused by the fasting period in Indonesia that starts on March 22.

A Guangdong-based utility was heard to have purchased eight vessels of 4,500 Kcal/kg NAR coal at 810-840 yuan/t, netting back to $95-98/t FOB Kalimantan.

"The upcoming fasting month has lent some support to the market sentiment, prompting utilities to step up coal purchases," said a Fujian-based trader.

He heard an April-loading Panamax cargo of 3,800 Kcal/kg NAR coal traded at $76/t FOB, against some offers of $77-78/t for this grade, almost unchanged from a day ago.

Traders also noted a rise in freight rate recently. As of March 16, the shipping rate for Panamax vessels on the route from South Kalimantan to South China stood at $8.9/t, up from $8.5/t a week earlier, while that for Supramax vessels on the same route were $11/t, a $0.5/t rise on the week.

On March 16, Fenwei assessed Indonesian 3,800 Kcal/kg NAR thermal coal at $87.5/t CFR South China, flat from a day ago; on a FOB basis, this grade was assessed at $76/t, also unchanged.

Indonesian 4,700 Kcal/kg NAR thermal coal were assessed at $111.5/t CFR, flat from the previous day. The FOB price for this grade was also assessed stable at $101.5/t.  

(Writing by Alex Guo  Editing by Harry Huo)
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