ICI 4 coal derivatives market activity brisk: Update
Adds details on ICI 4 Q3 2019 swaps trade and updates trade volumes in paragraphs 1-2.
Activity was brisk in the ICI 4 derivatives market today, with a total of 47,000t cleared on the CME. But the physical market was quiet, with trade dampened by public holidays in Indonesia and India.
In the ICI 4 derivatives market, a 10,000t clip for May traded at $38.50/t, which was followed by a 25,000t May clip that sold at the same price. Both trades were brokered by Singapore-based GFI. ICI 4 3Q 2019 swaps also traded at $38/t for 4,000 t/month — brokered by Singapore-based Evolution Markets. Today's trades mean that a total of 52,000t of ICI 4 derivatives contracts has now traded so far this week, after a 5,000t May clip changed hands late yesterday, also at $38.50/t. The latest deals were concluded at higher prices than similar trades for May contracts that were cleared on the CME late last week, which were done in a $37.65-37.70/t range.
May ICI 4 contracts were bid today at $38.50/t and offered at $39/t. This was slightly firmer than yesterday, when May contracts were bid at $37.80/t and offered at $38.50/t. Third-quarter 2019 contracts were bid today at $37.50/t and offered at $38.25/t.
Trade in the physical Indonesian market was muted today because of a public holiday for the country's presidential election, as well as the Mahavir Jayanti public holiday in India.
In the GAR 4,200 kcal/kg physical market, bids were steady to slightly firmer. A prompt late April-loading geared Supramax cargo traded at $38/t, which is higher than a similar late April/early May-loading cargo that traded last week at $37.60/t. Also last week, a late May/early June-loading cargo traded at $37.50/t, while a May-loading shipment changed hands at $37.80/t.
Bids for May-loading geared Supramax cargoes of this coal have remained in a broad $37-38/t range this week. A Chinese buyer bid for a May-loading Supramax cargo of this coal at $37/t yesterday, up slightly from bid levels heard in the market the previous day at $36-36.50/t, while most offers this week have been around $38.50-39/t.
Elsewhere in the Indonesian market, a May-loading GAR 3,400 kcal/kg cargo was heard to have traded at $23/t, which is higher than similar trades last week at $22/t. One factor supporting this market is short-covering by traders following recent Chinese utility tenders that sought low-calorific-value (CV) product, as well as market talk that some Chinese utilities may issue fresh tenders for low-CV coal late this week or early next week. A May-loading GAR 5,100 kcal/kg Capesize cargo of Indonesian coal traded at $54.75/t.
In the Australian thermal coal market, participants continued to try to seal some deals on the second-to-last day before the market closes for the Easter holiday on 19 April. But Australian NAR 5,500 kcal/kg coal has lost some of its competitiveness in India lately, with buyers in the country deeming South African coal more attractive.
A May-loading Capesize NAR 5,500 kcal/kg cargo was heard traded yesterday at $59/t, in line with similar trades last week. The most competitive bids and offers narrowed today to $59.50-60/t fob Newcastle for a May-loading Capesize cargo of NAR 5,500 kcal/kg coal. The bid/offer spread was wider for a Capesize loading in May-June, at $57-60/t fob Newcastle.
By contrast, Chinese buyers bid at $57-59/t fob Newcastle earlier in the week for a May-loading Capesize cargo of NAR 5,500 kcal/kg coal, and Chinese traders received offers at $61-62/t fob Newcastle.
The NAR 6,000 kcal/kg market was quieter, with some traders deciding to stay away following recent volatility that saw the price fall very sharply two weeks ago on oversupply, before rising again by $11.02/t to $84.39/t fob Newcastle last week.
In the Chinese domestic market, increased domestic coal supply has started to weigh on coal prices amid slower consumption. Offers of NAR 5,500 kcal/kg coal retreated to 630-635 yuan/t northern China ports today, down from levels of above Yn635/t late last week, when maintenance on the Daqin railway supported domestic prices. Utilities bid for the coal at no higher than Yn630/t today.
In China's futures market, the ZCE May contract closed at Yn620.2/t today, down by Yn1.4/t from yesterday.
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