ICI 4 derivatives trade at lower prices

A total of 16,000t of ICI 4 derivatives contracts traded today at prices lower than similar transactions done last week.

A 10,000t July ICI 4 clip traded at $35.80/t on the CME earlier today, lower than last week when a total of 20,000t of July clips traded in a $36-36.25/t range. Later in the day 6,000t traded at $34.80/t, with 2,000t each for October, November and December contracts. Fourth-quarter 2019 contracts by comparison traded last week in a $35.20-35.30/t range. All of today's trades were brokered by Singapore-based Evolution.

Bids for September contracts were at $34.90/t, with offers at $35.60/t, while fourth-quarter 2019 contracts were bid marginally lower at $34.70/t and offered at $35.35/t.

Today's trades mean 94,000t of ICI 4 derivatives contracts have traded so far this month, taking the total volume cleared on the CME since the contract was launched last year to over 3.95mn t.

Activity in the physical market was muted again, with buyers in China hesitant to bid for new cargoes amid ample stock availability at Chinese utilities and ports. But a few trades done for August-loading geared supramax cargoes of GAR 4,200 kcal/kg coal at around $35.25-35.50/t continued to surface. This follows market discussions of deals for this coal at around $35-35.30/t yesterday.

Bids and offers were mostly unchanged today, with bids for August-loading GAR 4,200 kcal/kg supramax cargoes in a $35-35.75/t range and most offers at around $36-36.50/t.

The Australian thermal coal market appeared to be firming slightly compared with last week.

An Australian producer was offering August-loading Capesize cargoes at $54-54.50/t fob Newcastle. Offers yesterday were in a $53.50-55/t fob Newcastle range for the same specification.

Argus assessed the NAR 5,500 kcal/kg market at $51.96/t fob Newcastle most recently on 5 July.

A 25,000t clip of NAR 6,000 kcal/kg coal for October loading traded in the higher calorific value market at $78/t fob Newcastle. This was up from the most recent trade with these specifications at $76/t fob Newcastle on 5 July. But these trades were irrelevant to the Argus index.

China domestic spot thermal coal prices held steady today as the market direction remained unclear. Market participants pegged the tradeable level at 606-608 yuan/t fob north China ports.

Combined coal consumption at coastal power plants operated by state-controlled utilities Huaneng, Datang, Guodian, Zhejiang Power, Shanghai Power and Yudean totalled 624,000t yesterday, down from 634,000t on 9 July. This was at least partially because of falling temperatures in parts of south China. Stocks were sufficient to meet demand for 30 days as of 10 July, up from 29 days the previous day.

No firm requirements emerged for imported sources but Indonesian supplies were tightening in anticipation of a rebound in prices, given rising prices in Australia and other regions.

Supplies from Russia also tightened as key rail connections were blocked by flooding in eastern Russia.

The price of thermal NAR 5,500 kcal/kg thermal coal futures for September delivery on the Zhengzhou commodity exchange closed at Yn583.20/t, up by Yn1.40/t from yesterday.