ICI 4 thermal coal derivatives trade increases

A total of 15,000t of ICI 4 thermal coal derivatives contracts traded today, although activity in the physical market may be starting to slow ahead of next month's lunar new year holiday in China.

Three 5,000t clips of February ICI 4 contracts were cleared on the CME today, with two 5,000t contracts trading at $35.10/t and another 5,000t clearing the exchange at the slightly lower price of $35.05/t. By comparison, a 5,000t February contract last traded on 18 January at the slightly lower price of $35/t.

January ICI 4 contracts were bid at $31.70/t and offered at $32.25/t today. February contracts were bid at $34.80/t and offered at $35.20/t, while March contracts were bid at $34.50/t. By comparison, January ICI 4 derivatives contracts were bid yesterday at $31.70/t against an offer at $32.20/t. February contracts were bid yesterday at $33.75/t and offered at $35.25/t.

Today's trades mean that 100,000t 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 around 1.85mn t.

In the physical market, there are signs that Chinese demand may be starting to taper off following the recent flurry of activity, with traders reporting fewer enquiries from Chinese buyers today. Most Chinese utilities may already be covered for their requirements, and the market may turn even quieter from next 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 heard in a wide range of $32-34.50/t, although offers were scarce with some producers still hampered by rain-related disruptions to loading operations in Kalimantan.

A February-loading GAR 4,200 kcal/kg geared cargo changed hands at $33/t today, with a larger gearless Panamax shipment of the same type of coal trading at the higher price of $34.50/t. Argus does not assess this cargo size for this type of coal.

Deals involving February-loading supramax cargoes of GAR 4,200 kcal/kg coal were done last week in a $31.50-33.25/t range. Argus last assessed GAR 4,200 kcal/kg cargoes on 18 January at $32.38/t, up by $1.25/t from the previous week.

Elsewhere in the Indonesian market, a GAR 5,100 kcal/kg Panamax cargo was bid at around $54/t, although offers were again scarce. By comparison, in the GAR 5,000 kcal/kg (NAR 4,600 kcal/kg) market yesterday, a February-loading gearless Panamax shipment was offered at $54.50/t.

Enquiries in the Australian market were mainly focused on high-calorific value coal which sells to Japan, as Chinese demand quieted ahead of the lunar new year.

A 50,000t April-loading cargo of NAR 6,000 kcal/kg coal traded at $100.50/t fob Newcastle on-screen today. But that is too far out to be included in the Argus index.

For February loading, 50,000-75,000t cargoes were offered in a $98-103/t fob Newcastle range on-screen. That compares with Argus' assessment last week at $99.35/t fob.

Smaller 25,000t February-loading cargoes were bid in the $98.50-100.35/t fob range and offered at $101-102.85/t fob, but that is too small to be included in the index.

The NAR 5,500 kcal/kg market was hovering around $62/t fob Newcastle. A February Panamax was heard to have traded at that level to China over the weekend, although that was unconfirmed. Argus most recently assessed the market at $61.43/t fob Newcastle on 18 January.

In China's domestic market, offers of NAR 5,500kcal/kg coal were flat from yesterday at no higher than 598 yuan/t fob northern China ports. Offers yesterday were in a Yn595-600/t range. Utilities continued to stay out of the market. The government in Shaanxi province is asking local mines to ensure there will be sufficient coal supply during the lunar new year holiday, which weighed on prices.

In China's futures market, the May contract on the ZCE closed at Yn576/t today, down by Yn11.8/t from yesterday.