ICI4 coal derivatives trades into 1Q 2019

The ICI4 Indonesian thermal coal derivatives market, which clears on the CME, traded into next year's first quarter for the first time today with a total of 30,000t, or 10,000t each for January, February and March.

Today's trades mean a total of 225,000t of ICIC4 derivatives have cleared so far this month, taking the total volume to have traded since the contract launched in February to just under 1.5mn t, after 260,000t traded in September, the highest for a single month since the launch of the contract.

Today's first-quarter 2019 trades all cleared at $38/t, brokered by Singapore-based Evolution. The prices at which today's trades were done were up slightly compared with recent transactions involving November and December contracts that cleared last week. Of last week's ICI4 trades, a total of 45,000t was cleared on 24 October after 20,000t traded the previous day. Of last week's total volume, 50,000t of November contracts traded at $37.50-37.85/t, down from November trades that were done the previous week at $37.75-38.85/t. A total of 20,000t of December ICI4 contracts also traded last week at $38.75/t, down from December trades that were done in late September at $40.60-41/t.

First-quarter 2019 ICI4 derivatives were bid yesterday at $38/t for 5,000t with Singapore-based brokers, with second-quarter contracts bid at the lower price of $37.50/t, again for 5,000t. November ICI4 derivatives were offered today at $35.50-35.75/t, with December bid at $35.50/t.

Sentiment in Indonesia's physical market remains weak and there were further signs today that prices are still softening amid weak demand from the main buyers China and India. The market has been sluggish so far this week with few trades done.

In the actively traded GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) market a trading firm received a bid for a November-loading geared cargo at $35/t, which was $1/t lower than a similar bid yesterday. A larger gearless Panamax cargo was being offered today at $37/t, which equates to around $36.50/t on a geared supramax basis. Argus does not capture trades involving Panamax shipments for this type of coal.

By comparison, offers for November-loading geared supramax GAR 4,200 kcal/kg cargoes were at $37.50/t early last week, with bids at $37/t. But offers for supramax cargoes of the same coal were at $37.25/t as of late last week and even as low as $37/t, with bids starting to emerge at $36.50/t. Deals for November-loading supramax shipments of this coal were done at $36.50-37/t last week.

Argus last assessedGAR 4,200 kcal/kg prices at $37.04/t on 26 October, down by $1.05/t from the previous week and the lowest since early June 2017.

The low calorific value Indonesian market is also coming under pressure, with a deal involving a November-loading geared supramax cargo of GAR 3,400 kcal/kg coal done today at $22.50/t. Two November-loading geared supramax cargoes traded last week at around $23/. By comparison, November-loading geared supramax cargoes of this coal traded during the previous week at $23.25-23.50/t, while a larger gearless Panamax cargo traded at the slightly higher price of $24.10/t.

Offers in the Chinese domestic market of NAR 5,500 kcal/kg coal were around 650 yuan/t on a fob north China ports basis today, which was little changed from yesterday. No bids emerged today, with Chinese utilities largely sidelined amid sluggish demand. In China's futures market, the Zhengzhou commodities exchange's January contract closed at Yn639.80/t today, up by Yn0.80/t compared with yesterday.

A deal in the Australian market involving a December-loading 90,000t fob Newcastle NAR 5,500 kcal/kg cargo was done today at $65.25/t. By comparison, three fob Newcastle NAR 5,500 kcal/kg December-loading cargoes were sold last week, underlining buying interest for December-loading high-ash coal over prompter November material. Last week's cargoes were sold by a producer in a relatively tight range of $64.30-65.00/t.