Indonesian coal prices show signs of stabilising

An aggressive sell-off in Indonesian thermal coal markets appears to have abated, with some Chinese buyers returning to the market. But prices were little changed today, with bids and offers at similar levels to yesterday.

September-loading geared supramax GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) cargoes were bid at around $38-40.25/t, with bids from Indian buyers at the lower end of this range. By comparison, bids for similar cargoes yesterday were heard in a slightly wider range of $38-41.25/t. A September-loading supramax GAR 4,200 kcal/kg cargo was offered at $41.50/t, up slightly from a late-August/early-September delivery cargo that was offered yesterday at $41/t. Argus last assessed fob Indonesia prices of this coal at $41.86/t on 3 August.

Elsewhere, an Indian buyer bid for an August-loading supramax cargo of Indonesian GAR 3,400 kcal/kg coal at $26/t against offers at $27.50/t. Demand for this type of coal has weakened slightly following the recent price declines for higher quality GAR 4,200 kcal/kg and GAR 3,800 kcal/kg types of coal, traders said.

But the view that the Asia-Pacific thermal coal market may be nearing a floor was underscored by the actively traded September contract on China's Zhengzhou Commodity Exchange closing at 616.8 yuan/t today, a rise of Yn31.8/t so far this week, with the increase mainly attributed to short covering.

The ICI4 paper market was little changed ahead of a public holiday in Singapore tomorrow, although the spread between buyers' bids and sellers' offers has narrowed slightly. The ICI 4 swap was bid at $41.10/t for August for 10,000t today, up slightly from $41/t yesterday. An offer was heard at $41.70/t today, down slightly from $41.85/t yesterday, although this was still softer than last week's settlement of $42/t.

Prices also appeared to be steadying in the high-ash market for fob Newcastle NAR 5,500 kcal/kg coal. Three cargoes of varied sizes traded today for loading from Newcastle terminals in September. The first 90,000t cargo of NAR 5,500 kcal/kg material sold for $64.25/t, the second 150,000t cargo sold for $64.50/t, while the third cargo of 50,000t went at $64.80/t. This compared with the most recent Argus-only weekly assessment of $64.86/t on 3 August.

An off-spec 130,000t cargo of NAR 5,100 kcal/kg coal for September loading sold at $61.50/t on a fob Newcastle basis today. This was a little firmer than the sale price of $60/t last week for two Panamaxes of fob Newcastle loading coal of the same quality.