June ICI 4 coal contracts steady, physical trade muted

Bids and offers for June ICI 4 derivatives were little changed compared with yesterday, although interest started to build further along the curve to the end of this year.

Trade in the Indonesian physical market is at a virtual standstill amid a week-long public holiday in the country. A public holiday in Singapore tomorrow for Hari Raya Puasa to mark the end of the Islamic fasting month of Ramadan is expected to dampen trade even further.

June contracts in the ICI 4 derivatives market were bid at $35.45/t and offered at $35.70/t-35.85/t, with different Singapore-based brokers. June contracts by comparison were bid yesterday at $35.40-35.45/t and offered at $35.65-35.75/t.

August ICI derivatives were bid at $35/t, although there were no corresponding bids. August contracts were last bid at $35.60/t and last offered at $35.85/t on 30 May.

But interest is starting to build further along the curve, with third-quarter 2019 ICI 4 contracts bid today at $35.50/t and offered at $36.50/t. Fourth-quarter 2019 contracts were bid at $35.50/t and offered at $37.50/t.

No ICI 4 derivatives had been traded by the end of Asian business hours, after a total of 10,000t of June contracts cleared on the CME in two 5,000t clips yesterday, both at $35.45/t.

Physical trade in the Indonesian market is at a standstill, although there is a view among participants that prices could come under pressure when businesses reopen next week. An unconfirmed offer emerged for a June-loading geared supramax of GAR 4,200 kcal/kg coal at $36.50/t. A trader said he would currently be unwilling to pay above $36/t, given recent weak demand from main buyer China. This is down from last week when a June-loading supramax of GAR 4,200 kcal/kg coal traded at $37.25/t.

The Australian spot market for thermal coal was quiet as bearish market conditions continued to keep Chinese buyers out of the action.

But a few utilities have issued tenders for higher calorific value coal, which could potentially be supplied by Australian producers. Taiwanese conglomerate Formosa Plastics Group today issued a tender seeking an unspecified amount of minimum NAR 5,650 kcal/kg (GAR 5,900 kcal/kg) coal with no more than 0.9pc sulphur on an air-dried basis.

This followed a tender from South Korean state-owned utility Koen late last week seeking three-year contracts for 1.4mn-1.8mn t of minimum NAR 5,600 kcal/kg thermal coal for delivery starting in August.

The China domestic market saw NAR 5,500 kcal/kg coal being offered at around 598-600 yuan/t fob north China ports today, while bids were about Yn5-10/t lower than offers.

China's futures market saw the Zhengzhou commodities exchange September contract close at Yn578.20/t, up by Yn3.40/t from yesterday.