ICI 4 coal derivatives trade at higher prices

A total of 65,000t of ICI 4 thermal coal derivatives changed hands in Asia-Pacific business hours today, with the latest trades done at higher prices than similar transactions that were concluded last week.

Around 40,000t was brokered by Singapore-based Evolution today with the remaining 25,000t brokered by Singapore-based GFI.

A 15,000t clip of May ICI 4 derivatives changed hands today at $39.25/t, followed by the sale of another 10,000t clip for May at the same price. Another 10,000t May clip changed hands later in the day, also at $39.25/t, while 5,000t sold for $39.10/t. This was stronger than trades last week for May at $38.50/t, which were up from similar sales in the previous week at $37.65-37.70/t.

In addition, 25,000t of June contracts traded today at $39.05-39.25/t. Today's transactions mean 172,000t 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 just under 3.3mn t.

Physical market subdued

Trade in the Indonesian physical market was muted, despite the activity in the derivatives market. In the Indonesian GAR 4,200 kcal/kg market, bids and offers were steady to firmer compared with late last week, with details of firm transactions slow to emerge. May-loading geared supramax cargoes of this coal were bid at around $38-38.50/t compared with offers at around $39-39.50/t. Larger Panamax cargoes of the same coal, also for loading in May, were offered at around $40/t, although Argus does not include this vessel size in the index for GAR 4,200 kcal/kg coal.

By comparison, GAR 4,200 kcal/kg May-loading geared supramax cargoes changed hands in a $37.70-38.50/t range last week. An April-loading cargo also traded last week at $38/t, although this fell outside the current 60-day May and June Argus assessment window.

Argus last assessed fob Indonesia GAR 4,200 kcal/kg prices on 18 April at $38.09/t, up by 37¢/t from the previous week. Prices of this coal have increased by more than 4pc since the start of the month, supported mainly by strong Chinese demand.

In the Australian market, trade was quiet on the first day back after yesterday's Easter Monday holiday. A May-loading Capesize cargo of NAR 5,500 kcal/kg coal was offered at $60/t fob Newcastle.

Some participants said the China market for Australian coal could potentially weaken again, after rising for two weeks on increased confidence that traders were able to maneuvre Australian cargoes into the country.

Customs clearance in China is heard to be taking two months and could lengthen to as much as three months, one market participant said today.

Imports of non-coking bituminous coal into China — a grade that has come mostly from Australia in the past — fell by 41pc on the year to 4.89mn t last month, according to China's national bureau of statistics, highlighting the effects of China's import restrictions this year.

Argus last assessed high-ash NAR 5,500 kcal/kg coal prices on 17 April at $59.77/t fob Newcastle, up by $1.17/t from the previous week.

The mood in the market for NAR 6,000 kcal/kg coal from Australia also appeared somewhat bearish, although there was some interest from Japanese buyers. This market has been hit by oversupply, as more coal from other origins such as Russia and Colombia has been making its way into Asia-Pacific on account of weakness in European demand.

In the China domestic market, coal prices are showing early signs of retreating this week compared with last week, with NAR 5,500 kcal/kg coal offered at Yn620-625/t fob northern China ports. This is down from Argus' last assessment of Yn626.50/t ($93.38/t) fob Qinhuangdao on 18 April.

In China's futures market, the May contract on the ZCE closed at Yn609.6/t today, down by Yn1.4/t from yesterday.