Indonesian physical coal prices hold steady

Indonesian physical coal prices were steady as the market made a typically slow start to the week, as a significant number of market participants mull the future of the markets at the Coaltrans Asia conference in Bali this week.

Details of deals were slow to emerge, with bids for July-loading geared supramax GAR 4,200 kcal/kg cargoes largely unchanged at around $35/t compared with around $34.50-35.50/t for much of last week. Most offers were also unchanged from late last week at around $36.50-37/t today.

The bid and offer levels seen today are in line with deals for this type of coal last week, when several geared supramax cargoes of GAR 4,200 kcal/kg coal traded in a $35.15-36.50/t range. Argus last assessed prices of this coal on 21 June at $35.96/t, up by 30¢/t from the previous week following weather-related supply disruptions out of Kalimantan earlier in the month.

Trading activity in the ICI 4 derivatives market was also muted after a total of 30,000t of mostly July contracts cleared on the CME last week at higher prices than the previous week. Bids for both June and July contracts were lower today, although offers for both months increased compared with last week.

June contracts were bid at $35/t today and offered at $36.50/t. June contracts by comparison were bid at $35.50-35.90/t on 20 June and offered at $36.25/t. July was bid at $35.50/t today and offered at $36.50/t. July ICI 4 contracts by comparison were bid at $35.50-36/t late last week and offered at $36.25/t.

The Australian market saw a July Capesize cargo of NAR 5,500 kcal/kg coal offered at $51/t fob Newcastle. This was already down from the most recent price assessment at the end of last week. The NAR 5,500 kcal/kg index was assessed at $51.93/t fob Newcastle on 21 June, down by 54¢/t on the week amid perceptions that China was tightening attitudes towards Australian coal imports again.

China's thermal coal imports rose last month to 20.68mn t, according to recently released customs data, up by 35pc from May last year. This was despite the existing restrictions on Australian coal imports, which have led to longer customs clearance times.

Most of the increase in imports came from non-coking bituminous coal, which rose by 41pc year on year to 7.26mn t in May, possibly the result of trading firms leveraging on the lower prices for Australian coal. This seems to have led to a renewed push to cut imports, with the customs administration last week warning local port authorities to restrict imports of "low-quality" coal.

Many Australian market participants are also attending the Coaltrans conference is Indonesia, where they say sentiment is now broadly bearish on the part of buyers and sellers.

The China domestic spot market saw offers of domestic NAR 5,500 kcal/kg coal around 600-605 yuan/t fob north China ports, flat from late last week. Bids from utilities were between Yn595-600/t fob.

China's futures market had the Zhengzhou commodities exchange September contract close at Yn606/t today, up by Yn1.40/t from the most recent trading day.