ICI 4 coal derivatives trade picks up: Correction

Corrects volumes of cleared trades in first paragraph

Activity in the ICI 4 derivatives market increased again on 10 April after a relatively slow start to the month last week, with another 35,000t cleared on the CME after 20,000t traded a day earlier.

The prices at which the latest trades were concluded were also higher than a day earlier. Two 10,000t clips of April ICI 4 derivatives contracts traded at $37.70/t, with a 10,000t clip and 5,000t clip of May contracts trading later at the same price. The trades were brokered by Singapore-based Evolution. By comparison, a total of 20,000t traded on 9 April in two 10,000t clips. The first of these was for April and was done at $37.60/t, with the second done at $37.65/t for May.

Bids and offers have also crept higher compared with a day earlier. April ICI 4 contracts were bid at $37.25/t, up from $37/t, while May was bid at $37.25/t and offered at $38.25/t, up from an offer at $38/t a day earlier.

The latest trades mean that more than 3.2mn t of ICI 4 contracts have been cleared on the CME since the contract launched in February last year.

Physical prices of low-calorific value Indonesian thermal coal were holding relatively steady to slightly firmer compared with a day earlier, with most buyers' and sellers' price ideas largely within a $37-39/t range. A late April-loading geared Supramax GAR 4,200 kcal/kg cargo traded late on 9 April at $38/t, which was unchanged compared with similar trades that were concluded earlier this week. A May-loading geared Supramax cargo of the same coal may have traded at the higher price of $38.50/t, although this could not be immediately confirmed.

In terms of bids and offers, a seller reported receiving a bid for a May-loading geared Supramax GAR 4,200 kcal/kg cargo at $38/t. May-loading Panamax cargoes of this coal were offered in a $39-39.50/t range, although Argus does not include this vessel size in the index for this type of coal.

In the Australian thermal coal market, a 25,000t clip of NAR 6,000 kcal/kg coal for loading in July traded on screen at $90.50/t on a fob Newcastle basis, although that is not relevant to the Argus index. This market has been especially volatile lately, with a 25,000t clip of this coal for loading in May trading on screen a day earlier at $79/t, which was up from a May-loading 25,000t trade that was done at $70/t on 5 April. A 25,000t July trade was also concluded on 5 April at $82/t.

In the high-ash Australian market, a June-loading Capesize cargo of NAR 5,500 kcal/kg coal was offered at $60/t fob Newcastle and bid at $57/t.

Chinese traders also appear increasingly interested in Colombian coal, which competes with Australian product in terms of quality but has not been a mainstay of the Chinese market to date. A Chinese trader was heard to have bought at least two late-April or early-May loading cargoes of Colombian coal on a fob basis. The specific price level could not immediately be confirmed but was understood to be equivalent to around $67-68/t cfr China. Another Chinese trader was also heard to have sold a Capesize cargo of Colombian NAR 6,000 coal kcal/kg coal at $74/t cfr China.

In the Chinese domestic market, NAR 5,500 kcal/kg coal is being offered at 630-640 yuan/t ($94-95/t) on a fob northern China ports basis. Utilities were bidding for this type of coal at close to Yn630/t.

In the China's futures market, the ZCE's May contract closed at Yn618.40/t today, up by Yn1.80/t from yesterday.