ICI 4 thermal coal derivatives trades continue

A total of 15,000t of ICI 4 thermal coal derivatives contracts traded today, although activity in the physical market continued to slow amid waning demand ahead of next week's lunar new year holiday in China.

A 15,000t February ICI 4 contract cleared on the CME today at $35.55/t. By comparison a total of 110,000t of February contracts cleared on the CME in a $34.90-35.30/t range in one of the most actively traded weeks last week.

February ICI 4 contracts were bid at $35.15-35.25/t and offered at $35.60-35.65/t.

Today's trade means that 210,000t of ICI 4 derivatives contracts have traded so far this month, taking the total volume cleared on the CME since the contract launched last year to just under 2mn t.

Chinese demand in the physical market is slowing following on from a flurry of activity earlier this month, with traders reporting fewer enquiries from Chinese buyers today. Most Chinese utilities may already be covered for their requirements. The market may turn even quieter this week ahead of the week-long lunar new year holiday.

In the actively traded GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) market, bids for February-loading geared supramax cargoes were in a $33.50-34/t range. Offers were in a wider $34.50-36/t range, although supplies continue to be scarce with some producers still hampered by rain-related disruptions to loading operations in Kalimantan.

Deals involving February- and March-loading supramax cargoes of GAR 4,200 kcal/kg coal were done last week in a $33-34.75/t range. Argus last assessed GAR 4,200 kcal/kg cargoes on 25 January at $33.75/t, up by $1.37/t from the previous week.

The Australian coal market was quiet today as many sellers and traders were away from their desks for Australia Day holiday, which happened to coincide with the run-up to the lunar new year holiday in major buyer China. Prices for NAR 5,500 kcal/kg coal were largely stable with last week's assessment of $62.83/t fob Newcastle, which represented a $1.40/t increase from the previous week that was fuelled by pre-holiday buying.

Many Chinese mines have already closed for the lunar new year holiday. Factories have also closed, which has weighed on power demand. Domestic NAR 5,500 kcal/kg coal was offered at around 590 yuan/t fob north China ports today. This indicates a drop from Argus' last assessment of Yn593/t ($87.50/t) fob Qinhuangdao on 25 January.

In China's futures market, the May contract on the ACE closed at Yn573.80/t today, down by Yn0.20 from the previous trading day.