Prices higher for 4Q Indonesian coal derivatives

A total of 45,000t of mostly August and September ICI 4 derivatives traded today, at prices marginally lower compared with similar transactions last week. But contracts for this year's fourth quarter cleared at higher prices.

Two 5,000t September clips traded at $33.55/t each, followed by three 5,000t August clips that traded at $33.50/t each. August contracts had traded last week in a $33.50-34.85/t range, while September contracts cleared at $33.60-34.85/t. Fourth-quarter contracts also traded, with 5,000 t/month for October, November and December done higher at $33.75/t compared with fourth-quarter 2019 contracts cleared last week at $33.50/t. A 5,000t September cleared at a higher $33.85/t towards the end of the day.

Today's trades mean that 379,000t of ICI 4 futures have traded so far this month, taking the total volume cleared on the CME since the contract launched last year to around 4.25mn t.

Buying interest in the low-calorific value physical market was muted as uncertainty surrounding Chinese import policies continues to hamper demand from main buyer China with bids and offers edging lower.

Details of firm transactions in the GAR 4,200 kcal/kg coal market remained scarce, as bids for August-loading geared Supramax cargoes were lower in a $33-34/t range compared with around $34/t for much of last week. Offers for this coal have come off at around $34.25-35/t compared with around $35/t last week. A mid-August loading supramax cargo traded last week at $34.50/t.

The Australian market saw a Panamax of NAR 5,500 kcal/kg coal loading in the second half of August offered at $55/t fob Newcastle. This was up from an offer of $54/t fob Newcastle last week for a similar contract.

The price of NAR 5,500 kcal/kg thermal coal was assessed at $52.47/t most recently last week, nearly unchanged from the previous week as a freeze on coal imports at some Chinese ports dampened buyers' interest.

The NAR 6,000 kcal/kg market had a 25,000t clip trade at $74/t on screen. This was down from $76/t, the price level of an October-loading clip of the same volume that traded last week.

The NAR 6,000 kcal/kg market was priced at $74.14/t fob Newcastle on 19 July, down by $1.60/t on the previous week.

The China domestic market saw spot thermal coal prices holding steady as coal consumption at the main coastal power plants kept rising on hot weather in most parts of China.

Coal consumption at the six main coastal power utilities increased by 15,500 t/d from a day earlier to 666,900 t/d today. Current stocks have dropped to the lowest level since 27 June, enough to meet demand for 26 days.

Thermal coal with NAR 5,500 kcal/kg for September delivery on the Zhengzhou commodity exchange closed at 586.20 yuan/t today, up slightly from Yn586/t on 19 July. Open interest on the contact fell by 4,434 lots to 249,068 lots. One lot equals 100t, indicating potential physical delivery volumes of around 12mn t in September.