ICI 4 coal derivatives trade out to 1H 2020

A total of 94,000t of mostly first-half 2020 ICI 4 coal derivatives were cleared on the CME during Asia-Pacific business hours today, while trade in the physical market remained muted amid a public holiday in India.

Two 5,000t September ICI 4 clips traded at $31.75/t each earlier in the day, brokered by Singapore-based Evolution. The price at which these trades were cleared on the CME was lower than the last Argus-assessed price for this month at $31.90/t yesterday.

These were followed by first-quarter 2020 trades, where 5,000 t/month for January, February and March traded at $34.15/t each. The price at which these trades were cleared on the CME was higher than the last Argus-assessed price for this period at $33.65/t yesterday.

Later in the day first-half 2020 trades totalling 60,000t cleared on the CME, where 10,000 t/month packages for January-June comprising clips of 2,000t, 3,000t and 5,000t traded at $34.25/t each, also brokered by Singapore-based Evolution.

These were followed by first-quarter 2020 trades, where 3,000 t/month for January, February and March traded at $34.15/t each. The price at which these trades were cleared on the CME was higher than the last Argus-assessed price for this period at $33.65/t yesterday.

Singapore-based brokers put the August bid-offer spread at $31.75-32.50/t, while the September bid-offer spread was at $31.50-31.95/t. The October bid-offer spread was at $31.25-31.85/t, while fourth-quarter 2019 contracts were bid at $30.75/t and offered at $32.30/t.

Argus last assessed October contracts at $31.70/t and fourth-quarter 2019 contracts at $31.65/t yesterday.

In the physical GAR 4,200 kcal/kg market, details of firm trades were slow to emerge. A September-loading geared Supramax cargo was heard to have been sold to a Chinese buyer at around $31/t, although this could not be immediately confirmed.

In terms of bids and offers, prices were flat to slightly softer today, with market participants awaiting the results of a tender issued by Chinese state-owned utility Guodian's earlier this week. The tender, which seeks around 950,000t of various grades of coal, closes tomorrow. There is a sense among market participants that supply contracts could be awarded at prices below recent spot transactions.

September-loading geared Supramax cargoes of GAR 4,200 kcal/kg coal were bid in a $30.50-31/t range today and offered at $32-32.50/t. Late August-loading cargoes were bid at $31/t and offered at $31-32/t, although August-loading shipments fell outside of the current Argus 60-day September and October assessment window.

Trade in the Australian market was also quiet. A 25,000t clip of November-loading NAR 6,000 kcal/kg coal changed hands at $66.50/t fob Newcastle on screen. This is down from a trade with the same specifications last week at $70/t fob Newcastle. But this is not usable in the Argus index because of its small size, and it also falls outside the current Argus 60-day September and October assessment window.

The NAR 6,000 kcal/kg market was assessed most recently by Argus on 8 August at $67.80/t fob Newcastle.

China's domestic coal prices continued to come under pressure from weak utility demand. Offers of physical NAR 5,500 kcal/kg coal fell to 580-585 yuan/t ($82.40-83.10/t) fob northern China ports, while bids were around Yn575/t. This compares with offers of Yn585-590/t and bids at Yn580/t earlier this week.

The resumption of China-US trade talks supported China's futures market for a second consecutive day. The September contract on the Zhengzhou commodity exchange closed at Yn580.60/t today, up by Yn1.60/t from yesterday.