Indonesia coal trade slows ahead of China holiday

Activity in the Indonesian thermal coal market continued to turn quieter ahead of China's lunar new year holiday that begins next week, although prices held relatively steady amid tight supplies.

A number of Indonesian producers are sold out following the recent increase in pre-holiday demand from Chinese buyers, while continuing rain in Kalimantan is continuing to curb supplies. Offers have subsequently become scarce and details of firm transactions have been slow to emerge this week.

There is still some buying interest from Chinese importers, although most of the country's utilities are now covered for their requirements. Some of the recent buying interest may be being primarily fuelled by a recent fall in freight rates, one market participants said.

Offers were few and far between in the actively traded GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) market, while there are also signs that bid levels may be starting to retreat from the highs of last week as the market turns quieter. A February-loading geared supramax GAR 4,200 kcal/kg cargo was bid today at $33.75/t, with larger Panamax vessels of the same coal bid at $34.75/t. Argus does not include Panamax vessels in the index for this type of coal.By comparison, bids for February-loading geared supramax cargoes of this type of coal were in a $33.50-34/t range yesterday, with offers in a wider $34.50-36/t range,

Deals involving February and March loading supramax cargoes of GAR 4,200 kcal/kg coal were done last week in a $33-34.75/t range. Argus last assessed GAR 4,200 kcal/kg cargoes on 25 January at $33.75/t, up by $1.37/t from the previous week.

Trade was also slow in the ICI 4 derivatives market today, after a total of 15,000t of ICI 4 February contracts traded yesterday at $35.55/t. February contracts were bid today at $35/t and offered at $35.50/t, compared with bids yesterday at $35.15-35.25/t and offers at $35.60-35.65/t.

A total of 210,000t of ICI 4 derivatives contracts have traded so far this month, taking the total volume to have traded since the contract launched last year to just under 2mn t.

The mid-calorific value (CV) market saw a February-loading gearless Panamax GAR 5,100 kcal/kg cargo bid at $51/t. By comparison, a February-loading geared supramax GAR 5,000 kcal/kg cargo traded last week at $53/t, although Argus only includes larger Panamax cargoes in the index for this coal. A GAR 5,100 kcal/kg Panamax shipment was being offered early last week at $57/t.

The Australian coal market was still quiet today coming off yesterday's Australia Day holiday.

The high-CV market saw a 25,000t March-loading cargo traded on screen for $100/t, although this was too small to be included in the index.

Workers at Australia's 25mn t/yr Port Kembla Coal Terminal remained on strike for a fourth day today. But the shutdown at the port, which ships more coking than thermal coal, was unlikely to have a significant impact on the market. At least some volumes have been routed through the larger Newcastle port instead.

The China domestic market was also quiet ahead of the lunar new year holiday. Only a few offers of NAR 5,500 kcal/kg coal were available at 585-590 yuan/t fob north China ports.

China's futures market saw the May contract on the Zhengzhou commodity exchange close at Yn571.60/t, down by Yn2.20/t from yesterday.