Indonesian thermal coal prices hold steady

Indonesian thermal coal prices were little changed today in a thinly traded market, with most participants waiting for the results of large Chinese utility tenders that close tomorrow.

Chinese state-controlled power utility Huaneng has issued two tenders to buy imported thermal coal totalling around 1.2mn t for its coastal utilities with a laycan between late April and the end of May. The utility is seeking to buy four Panamax cargoes in US dollars on a fob basis, as well as 17 cargoes or 893,000t of coal at prices in yuan on a cfr basis with value-added tax (VAT) included. It is seeking coal with calorific value (CV) in a NAR 3,800-NAR 5,250 kcal/kg range.

Fellow state-controlled power utility Guodian has also issued a tender to buy 345,000t of imported thermal coal for its power plants in southern China's Fujian province for delivery in May. The utility did not indicate the origin of the coal but the cargoes are likely to be from Indonesia. The coal should have a CV of no less than NAR 5,000 kcal/kg. It is also seeking two 14,000t cargoes for delivery to Quanzhou or Fuzhou port from 1-31 May.

Most market participants are waiting for details of the tender results to emerge to get a clearer sense of price direction.

Details of spot trades were slow to emerge today as a result, although a late-April loading 10,000t cargo of GAR 4,200 kcal/kg coal was heard to have traded at around $37.65/t. But this cargo size is too small to be included in the Argus index.

Bids and offers for this type of coal were little changed to slightly firmer compared with yesterday, with late-April loading geared supramax GAR 4,200 kcal/kg cargoes offered at around $37.75/t and bid at around $37/t. By comparison, bids in this market for late-April loading geared supramaxes were in a $36-36.50/t range yesterday, with offers at around $37.50-38/t.

Argus last assessed fob GAR 4,200 kcal/kg prices on 29 March at $36.51/t, down by 90¢/t from a week earlier.

Trade in the ICI 4 derivatives market was also muted today. April contracts were offered at $38.50/t and bid at $37.35-37.50/t with Singapore-based brokers, although there were few details of firm transactions. A total of 295,000t of ICI 4 derivatives contracts traded last week, while a total of 1.053mn t traded in March, the highest monthly volume to date.

In the Australian thermal coal market, interest in NAR 6,000 kcal/kg coal continued to focus mainly on smaller volumes. A July-loading 25,000t clip was bid at $82.30/t fob Newcastle on screen, and a May cargo of the same quantity was offered at $80.25/t fob Newcastle.

That represented a decline from the market level yesterday, when a May-loading 25,000t cargo traded at $82.50/t fob Newcastle. But that is too small to meet the minimum volume requirement for the Argus index.

In the China domestic market, a few traders of domestic coal were willing to lower their offers to around 620 yuan/t fob northern China ports today, while others continued to offer at around Yn625/t. Utilities were quiet.

In China's futures market, the May contract on the ZCE closed at Yn605.2/t, down by Yn3.6/t from yesterday.