Rainy weather helps boost Indonesian coal seller hopes

Bad weather in Indonesia and slightly tighter physical coal supply ahead of the lunar new year in February appeared to boost seller optimism at the start of this week.

The ICI 4 paper market for low-calorific value (CV) Indonesian coal also traded today at a level that suggests physical prices are expected to firm to slightly stronger than last week. One 5,000t clip of ICI 4 January futures, which clears on CME, was traded at $31.65/t today, brokered by GFI. This was roughly in between the January traded prices of $31.80/t and $31.50/t for 15,000t each last week.

January ICI 4 futures were bid at $31.45-31.75/t today, while offers for the same month were at $31.85/t.

Demand for physical Indonesian coal appeared to be firming today amid enquiries from Chinese and Indian buyers — with some interest also expressed in coal for post-lunar new year restocking. Chinese buyers possibly have the edge in terms of demand for low-CV coal in the run-up to the start of the holiday in early February, while Indian buyers are demonstrating a willingness to pay more than Chinese buyers for mid-CV Indonesian coal, in the opinion of at least one Indian market participant.

Several Indian buyers were paying more than their Chinese counterparts for GAR 5,100 kcal/kg coal late last week at around $51-52/t for February, while Chinese buyers were reputedly closer to $50/t, the same participant said.

In the market for fob Indonesia GAR 4,200 kcal/kg geared vessels, several offers were reported today at around $32-32.50/t for February, with one firm bid at $31.50/t. But few deals have been concluded yet this week.

In the fob Indonesia GAR 4,200 kcal/kg market for gearless Panamaxes, some bids were heard at $31/t today as several buyers still sought to find value in the market. But offers were around $32.50-33/t for February loading.

Some more optimistic mining firms also stopped offering on a fixed price basis for March loading GAR 4,200 kcal/kg coal today, one market participant said. Some switched to index-linked offers at a premium of $1.25-1.90/t to ICI 4 for a February Panamax while offering at a 25-30¢/t premium to the same index for a geared supramax of the same coal.

In Australian coal market, NAR 6,000 kcal/kg product traded at $95.50/t and $96/t fob Newcastle on the Global Coal screen. Both cargoes, for 50,000t loading in February, fit the Argus index. The trades were done at a softer price than two over-the-counter deals at $97/t and $97.25/t last week for this quality of coal for February loading.

In China's domestic market, fob prices at northern China ports remained weak today amid sluggish buying. Traders are trying to clear stocks before the lunar new year holiday and offered NAR 5,500kcal/kg coal at prices no higher than 585 yuan/t ($86.42/t) fob, which attracted little buying interest from utilities. The offers today were just under the Argus assessed price on 11 January of Yn586/t.

The futures market responded promptly today to reports of coal mine closures in Shaanxi province following a fatal accident, with the May contract closing at Yn577.20/t, up from Yn561/t on 11 January. This followed consecutive day-on-day declines since 9 January.