Indonesian physical coal prices hold steady

Indonesian physical thermal coal prices held steady, with bids and offers little changed compared with yesterday.

Slow demand from China continued to dampen trade. Details of firm transactions have been slow to emerge so far this week, following a week-long Indonesian public holiday last week.

Market participants are monitoring the supply situation in Kalimantan after at least two producers were forced to declare force majeure on shipments because of heavy rain.

Low-calorific value coal producer Jhonlin possibly has declared force majeure on three Panamax shipments amounting to around 250,000t of GAR 4,200 kcal/kg coal because of flooding at one of its mines in south Kalimantan. It could also possibly have to delay other shipments amounting to another 300,000t this month.

Fellow producer PCN may have also declared force majeure on some of its shipments from south Kalimantan. Production in east Kalimantan is also being hampered by heavy rainfall.

The actively traded GAR 4,200 kcal/kg market saw an Indonesian producer offering a July-loading geared supramax cargo at $36/t. This is the same price at which cargoes of this coal were being offered in the market late last week, but slightly higher than yesterday when an offer was at $35.50-35.75/t. Bids were at around $35-35.50/t, again little changed from last week but up slightly compared with a bid of $34.50/t yesterday.

Trade in the ICI 4 derivatives market was also quiet today after a 15,000t June clip cleared on the CME yesterday at $35.80/t. Bids and offers were little changed compared with yesterday, with June contracts bid at $35.80-36/t and offered at $36.25-36.75/t with different Singapore-based brokers. June ICI 4 derivatives were bid yesterday at $35.40-35.80/t and offered at $36.10-36.25/t. July was bid today at $35.75/t and offered at $36.75/t.

The Australian thermal coal market had a 25,000t clip of NAR 6,000 kcal/kg coal traded on screen at $77.50/t fob Newcastle for September loading. This falls outside the loading window for the Argus index, which is currently focused on July- and August-loading cargoes.

The NAR 6,000 kcal/kg index, which also has a minimum volume requirement of 50,000t, was assessed at a more than two-year low of $72.52/t fob Newcastle most recently on 7 June.

Australian shipments to China continued to rise last month as lower prices offset the effects of Chinese import restrictions on Australian coal, recently released data show. The two terminals at Newcastle shipped 1.97mn t of coal to China in May, up from 1.7mn t in April and 1.02mn t in March.

The price for NAR 5,500 kcal/kg coal, which sells mainly to China, was assessed at a nearly three-year low of $54.37/t fob Newcastle last week.

China's futures market saw the Zhengzhou commodity exchange September contract close at 593.80 yuan/t, up by Yn6.80/t from yesterday.