Indonesian physical coal prices under pressure

There were further signs that low-calorific value (CV) Indonesian coal prices were coming under pressure, with details starting to emerge that a September-loading GAR 4,200 kcal/kg cargo may have traded at a lower price compared with recent similar deals.

Bids and offers for GAR 4,200 kcal/kg coal were little changed compared with yesterday, with bids at around $30.50/t for geared supramax cargoes and offers at around $31.50/t. But details began to emerge that a September-loading supramax cargo may have traded at the lower price of around $30.40/t.

By comparison, a deal involving a supramax GAR 4,200 kcal/kg shipment was done late last week at $31/t. Argus last assessed this market on 16 August at $31.19/t, down by 90¢/t from the previous week and the lowest since early January.

Trade was muted in the ICI 4 derivatives market, with details of fresh deals slow to emerge after a total of 104,000t was cleared on the CME last week. September ICI 4 contracts were bid today at $30.90/t and offered at $31.50/t, lower than the last Argus settlement price for this month yesterday at $31.55/t. October contracts were bid today at $30.75/t and offered at $31.50/t, which again was lower compared with yesterday's Argus October settlement price, also was also at $31.55/t.

The Australian market also appears to be softening amid ample supplies.

A 75,000t October-loading cargo of fob Newcastle NAR 6,000 kcal/kg coal was bid at $59/t and offered at $63/t on screen.

That bid-offer range was broadly in line with yesterday's index-relevant trade at $61.25/t fob Newcastle for an October-loading 90,000t cargo, but was lower than the most recent Argus assessment of $64.28/t on 16 August.

A fourth-quarter loading 25,000t clip was also bid and offered on screen at $61.08-66/t fob Newcastle, with a 25,000t clip loading in the second quarter of 2020 traded at a 25¢ discount to the GlobalCoal index. But these specifications are irrelevant to the Argus index.

Chinese demand in the NAR 5,500 kcal/kg market was subdued, while there was an offer at $49/t fob Newcastle for a September-loading Capesize or Panamax cargo. That was down from last week's assessment of $49.49/t fob Newcastle.

Indian buyers have started to step into the market, possibly to capitalise on the lower prices, bidding $47/t fob Newcastle for a September-loading NAR 5,500 kcal/kg Panamax cargo.

China's domestic coal market was stable for a second straight day. Offers of NAR 5,500 kcal/kg domestic coal were around 580-585 yuan/t fob north China ports compared with around Yn580/t late last week. Bids were around Yn575-580/t fob.

Futures prices responded more actively to a fall in stocks at Chinese coastal utilities, which reached a two-month low of 16.4mn t yesterday. The September contract on the Zhengzhou commodity exchange closed at Yn591.20/t today, up by Yn5.40/t from yesterday.