Indonesian physical coal prices steady to lower

Physical prices of low-calorific value Indonesian coal were flat to slightly softer today following the results of a Chinese utility tender, which was awarded at prices below recent spot deal levels.

Chinese utility Huaneng purchased 690,000t of imported coal to be delivered to its power plants during late August to early October. Of this, around 543,000t was Indonesian coal in a NAR 3,800-5,500 kcal/kg range. This included 178,000t of GAR 4,200 kcal/kg coal in three shipments for delivery from late August to mid-September, which were awarded at prices netting back to $31.80-32/t fob, below the level of recent trades.

In the spot market, a cross-month loading August-September geared Supramax GAR 4,200 kcal/kg cargo was bid at $32.50/t today, in line with yesterday, and offered at $33-33.25/t. A September-loading geared Supramax cargo of the same coal was bid at $31.80/t but no corresponding offers were heard.

Offers for late August-loading geared Supramax cargoes were around $32/t, down from offers of $32.50-33.50/t yesterday for August-loading shipments. Bids were still hard to come by at this level.

By comparison, spot trades involving August- and September-loading geared Supramax cargoes of this coal traded last week at $33-33.15/t, and Argus assessed the fob GAR 4,200 kcal/kg price at $33.13/t most recently on 2 August.

Bid levels will likely fall on the news of the tender results, potentially pulling the market down further, market participants said.

Trading was slow in the ICI 4 derivatives market. August ICI 4 contracts were bid at $32.30/t and offered at $33/t, roughly in line with yesterday but down from the last Argus-assessed price for this month on 31 July at $33.80/t. September contracts were bid and offered at $32.10-32.75/t, around the level of yesterday's Argus-assessed settlement price of $32.45/t for September.

In the Australian thermal coal market, a few Capesize and Panamax cargoes of NAR 5,500 kcal/kg coal were offered around $50/t fob Newcastle for September-November loading, down from the Argus-assessed price of $50.10/t fob Newcastle last week, but bids were scarce.

China's domestic coal prices held steady today, with offers of NAR 5,500 kcal/kg coal at around 590 yuan/t ($83.70/t) fob northern China ports, while bids were around Yn585-590/t fob. This compares with Argus' latest assessment of Yn594.20/t ($85.44/t) fob Qinhuangdao on 2 August.

In China's futures market, the September contract on the Zhengzhou commodity exchange closed at Yn578.40/t today, up by Yn0.40/t from yesterday.