Indonesian coal prices flat as tender details emerge

The Indonesian physical coal market made a typically slow start to the week, as details of cargoes awarded in a relatively large Chinese-state controlled utility tender late last week began to emerge.

Market participants are also monitoring the situation after Indonesian coal mining company Bayan Resources was late last week forced to declare force majeure on some shipments because low water levels on the Kedang Kepala river in Kalimantan are affecting its ability to transport cargoes by barge to waiting vessels. As many as 15 vessels may have been delayed by the low water levels, according to some market estimates.

Attention was also focused on Chinese state-owned utility Guodian, which issued a fresh tender today to buy a further 370,000t of imported, mostly low-calorific value (CV) coal for delivery to its power plants in south China's Fujian province on 10-30 September. The tender closes tomorrow at 2pm Beijing time (06:00 GMT).

This follows closely on a Guodian tender that closed on 16 August seeking around 950,000t of various grades of coal, including low-CV Indonesian material, for the company's Jiangsu power plants. The utility was heard to have awarded a cargo of NAR 3,400 kcal/kg (GAR 3,800 kcal/kg) Indonesian coal from this earlier tender at around 308.50 yuan/t ($43.80/t) cfr plus value added tax (VAT), which nets back to around $26/t. It was also heard to have awarded a geared Supramax cargo of NAR 3,800 kcal/kg (GAR 4,200 kcal/kg) Indonesian coal at Yn348/t cfr plus VAT, which nets back to around $31/t fob. Guodian may have also awarded a Panamax cargo of NAR 4,600 kcal/kg (GAR 5,000 kcal/kg) material at around $46/t fob.

The price at which the GAR 4,200 kcal/kg cargo was awarded in the tender was in line with transactions in the spot market late last week, when a September-loading geared Supramax shipment also changed hands at $31/t. September-loading geared Supramax GAR 4,200 kcal/kg cargoes were bid today at around $30.50/t, with offers at around $31.50/t.

The ICI 4 derivatives market made a slow start to the week after a total of 104,000t was cleared on the CME last week. September contracts were bid today at $30.90/t and offered at $31.75/t, while October was bid at $30.75/t and offered at $31.50/t. The last Argus-assessed price for September ICI 4 futures on 16 August was at $31.65/t, when October was assessed at $31.55/t.

Two trades were reported today in the market for Australian coal, with fob Newcastle NAR 6,000 kcal/kg coal changing hands in a $61.25-62.50/t range, well below the most recent Argus assessment of $64.28/t on 16 August.

One of the fob Newcastle NAR 6,000 kcal/kg cargoes for 90,000t sold on screen at $61.25/t for October loading. While this cargo fits the Argus index, a second October-loading cargo done a few hours later at $62.50/t for 25,000t was too small to be included in the index. Several offers emerged on screen for 75,000t cargoes – the first at $62.50/t fob Newcastle for October loading and the second at $64.75/t for November loading from the same port. Few bids were heard.

Both NAR 6,000 and NAR 5,500 kcal/kg Australian coal was well supplied, traders said, with Chinese buyers waiting on the sidelines to see whether Beijing would impose further import quotas in the months ahead.

But some buying interest emerged in the tender market for high-CV coal today, with Taiwan's state-owned Taipower issuing a tender for 320,000t of coal with a minimum gross CV of 6,200 kcal/kg, maximum ash of 14pc and sulphur not exceeding 0.7pc. The coal can be supplied from Australia, Canada, China, South Africa, the US and Venezuela. The deadline for receiving bids is 5pm on 28 August in Taipei (10:00 GMT).