Indonesian coal prices hold steady

Indonesian thermal coal prices held steady today, with a number of market participants adopting a wait-and-see approach while assessing possible damage to infrastructure in south China following a major tropical storm.

Super typhoon Mangkhut made landfall on the Taishan coast of Jiangmen city, Guangdong, in south China at around 5pm local time (09:00 GMT) yesterday, after hitting the northern Philippines on 15 September, as well as Guam and the Marshall Islands earlier this week. Operations at least one Chinese port, Zhanjiang, were halted on 14 September and market participants are assessing potential delays at other major regional ports over the coming days.

Buy the Chinese physical market held steady, with offers of NAR 5,500 kcal/kg domestic coal at around 630-640 yuan/t today, little changed from late last week, while bids were scarce. The January contract on the Zhengzhou commodities exchange closed at Yn625.40/t, down by Yn5.80/t from 14 September.

Confirmed deals in the Indonesian market were scarce today, although a late September loading supramax of GAR 5,000 kcal/kg (NAR 4,600) coal was sold to an Indian buyer at around $52/t. This cargo is irrelevant to the Argus index, which assesses only gearless Panamax cargoes for this type of coal. The shipment also falls outside the current Argus 60-day October and November loading window. By comparison, a bid for a cross-month late-September/early October loading Panamax cargo of slightly higher quality of GAR 5,100 kcal/kg product was at $54/t last week, with offers at $56/t for late September. Offers for October-loading shipments were slightly higher at $56.50/t last week.

Argus last assessed fob prices of Indonesian GAR 5,000 kcal/kg coal on 14 September $53.69/t, down by 46¢/t compared with a week earlier.

The GAR 4,200 kcal/kg market was also steady today, with little in the way of firm transactions. A late September loading GAR 4,200 kcal/kg geared supramax cargo was offered at $38.50/t against a bid at $38.20/t, although this shipment also falls outside the current 60-day October and November assessment window. By comparison, an October-loading supramax shipment traded at $38.50/t last week, while a cross-month late September/early October loading cargo traded at the slightly lower price of $38.30/t. Several larger Panamax cargoes of this coal also traded last week at around $39-39.10/t but this volume does not fit the index.

Argus last assessed fob prices of Indonesian GAR 4,200 kcal/kg coal on 14 September at $38.49/t, up by 28¢/t from a week earlier.

ICI 4 derivatives

The ICI4 derivatives market was relatively quiet today after a flurry of activity last week, with interest displayed further out along the forward curve. Trading firms were not only trading prompt futures contracts but also sought positions as far out as next year. This reflects growing confidence in the market, which had been largely focused on the front and second months recently.

September was bid today at $38.10/t in the ICI 4 derivatives market and offered at $39.25/t. October was bid at $39.25/t against an offer at $41.25/t, while fourth-quarter contracts were bid at $39.25/t and offered at $41.50/t.

A total of 85,000t of September and October ICI4 derivatives contracts traded last week, with 35,000t of those brokered by Evolution on 14 September. Of last week's total trades, 70,000t of ICI4 derivatives traded at $39-39.25/t, which was down from September trades cleared during the previous week at $40-40.35/t. A total of 15,000t of October contracts traded last week at $40.10/t, up from the last October trade that was cleared in late August at $39.75/t. The latest trades mean that 95,000t of ICI4 derivatives have traded this month, taking the total volume cleared by the CME since the contract launched in February to around 1.1mn t.