ICI 4 coal derivatives prices little changed

A total of 25,000t of July ICI 4 derivatives contracts traded on the Chicago Mercantile Exchange (CME) today at comparable prices to recent similar transactions, although trade in the physical market remained sluggish amid weak demand from key buyers China and India.

A 15,000t July ICI 4 clip traded at $37.55/t on the CME earlier today, which was followed by a 10,000t July clip that changed hands at the slightly higher price of $37.70/t. Today's trades were brokered by Singapore-based Evolution. By comparison, a 30,000t July clip traded yesterday at $37.65/t, which was followed by a 5,000t clip that transacted at the slightly higher price $37.70/t.

Most bids and offers in the ICI 4 derivatives market were broadly flat today, with May contracts bid at $38.40/t and offered at $39/t, both unchanged from yesterday. June was bid today at $37.50/t, which was again unchanged from yesterday, although there were no corresponding offers. July was bid today at $37.05/t, again unchanged from yesterday, although July offers declined to $38.10/t today from $38.55/t yesterday. Third-quarter 2019 contacts were bid today at $36.55/t, up from $36.30/t yesterday. Third-quarter contracts were offered at $38.20/t today, down from $38.75/t yesterday.

On the intermonth spreads, July was bid at a 20¢/t discount to August, up from 15¢/t yesterday, and offered at a 55¢/t premium, down from 65¢/t yesterday. August was also bid at a 20¢/t discount to September today, up from 15¢/t yesterday and offered at a 55¢/t premium, down from 65¢/t yesterday.

Today's trades mean that 60,000t of ICI 4 derivatives contracts have traded so far this week, taking the total volume to have been cleared on the CME so far this month to 285,000t. More than 3.6mn t has traded since the contract launched last year.

Despite the recent uptick in activity in the derivatives market, trade in the Indonesian physical market remains muted, largely because of weak demand from China and India.

In the GAR 4,200 kcal/kg market, bids and offers were broadly stable compared with yesterday, with details of firm transactions slow to emerge. Bids for June-loading geared Supramax cargoes of this coal were in a $38-38.25/t range today, with offers at around $39/t. By comparison, two June-loading Supramax GAR 4,200 kcal/kg cargoes changed hands last week at $38.75/t, down from around $39/t for a similar cargo during the previous week.

In the Australian thermal coal market, a 25,000t clip of NAR 6,000 kcal/kg coal traded on screen for $81/t fob Newcastle for August loading. This is $4.50/t lower than a deal for coal with the same specifications last week, indicating that the high-calorific value market is continuing to fall.

The NAR 6,000 kcal/kg price was last assessed by Argus on 17 May at $82.32/t fob Newcastle.

In China's domestic spot market, weak utility demand continued to weigh on prices. Domestic NAR 5,500 kcal/kg coal was offered at 615-618 yuan/t ($89.10-89.50/t) fob northern China ports today, although bids were sparse.

The September contract on the ZCE closed at Yn592.40/t today, down by Yn3/t from yesterday.