ASIA THERMAL COAL: Sellers' prices remain unmet in CFR China cargo market.(prices pushed UP)..MARCH 22,2014
Chinese buyers refrained from meeting the delivered-price expectations of seaborne cargo sellers in unsettled Asian trade Friday, as weak fundamentals in the domestic market prolonged a week-old standoff between buyers and sellers, said market sources.
Coastal power plants in China are unwilling to go above $75/mt CFR South China for imported 5,500 kcal/kg NAR thermal coal with a delivery date in the next 15 to 60 days, said traders.
"At present, the bids from Chinese downstream utilities for South African 5,500 kcal/kg NAR coal were at $72-73/mt CFR South China," said a trader in China's Tianjin province.
A better option being investigated by the Chinese trader was the potential resale of South African 5,500 kcal/kg NAR cargoes to higher-paying customers in South Korea for a delivered price of $76/mt, he said.
A China-based cement producer was scouting specifically for one cargo of Richards Bay high-ash thermal coal with sulfur of no more than 0.8% at $76/mt CFR South China for shipment in April.
A source at a major international coal producer noted that demand for South African 5,500 kcal/kg NAR thermal coal had edged up currently amid supply tightness, pushing up prices for April- and May-loading cargoes.
"There are several bids [for prompt-loading cargoes] but no offers from Australia and South Africa," a Singapore-based broker said.
As Japanese power utility and Australian coal producer Glencore Xstrata prepared to take a weekend break from their price negotiations for JFY 2015 supply contracts, FOB Newcastle 6,000 kcal/kg NAR prices onscreen were a little lower than earlier in the week.
A 25,000 mt parcel for loading in June was bid at $72.50/mt to an offer at $74.80/mt FOB Newcastle on globalCOAL in Asia trade.
"We dare not to book any May- and June-arrival cargoes. There is too much uncertainty," said a trader in China's Shandong province, who set a price limit of $75/mt CFR South China for April-arrival cargoes.
Offer prices for seaborne-traded cargoes were steady on-day at $75.50-76/mt CFR in the South China market.
May-arrival cargoes of Australian origin 5,500 kcal/kg NAR cargoes were bid at $74.25/mt CFR to offers around $76/mt as heard through broker Marex Spectron, Friday.
A Shandong-based trader was heard to have booked several Capesize cargoes of Australian 5,500 kcal/kg NAR coal at $61/t FOB Newcastle, though this trade was unconfirmed by parties involved.
Some Capesize cargoes of 5,500 kcal/kg NAR Australian high-ash coal were heard being offered at $63.50/mt FOB for April and May delivery, according to another Shandong-based trader
Freight rates between Newcastle, Australia and South China averaged $15/mt for Capesize ships Friday, indicating a landed price of about $78.50/mt CFR based on FOB offer prices, the trader noted.
The trader was only willing to pay $74/mt CFR for April-delivery cargo.
China's depreciating currency has only helped demand for domestic material, said market sources.
"Chinese 5,500 kcal/kg NAR domestic price is sliding towards Yuan 500/mt FOB Qinhuangdao," said a Hong Kong-based trader, referring to the lower bid prices.
Some Chinese traders were expecting intermittent maintenance to the Datong-Qinhuangdao railway due to start on April 6 to support domestic coal prices.
"Inbound trains to Qinhuangdao port will be reduced during the maintenance. Supply will be tightened at that time," said a Tianjin-based trader.
The trader believed that prices for 5,500 kcal/kg NAR domestic thermal coal would return to Yuan 530/mt by early April, up from the current level of Yuan 515/mt FOB Bohai ports, including 17% VAT.
"I would expect the domestic thermal coal market to stabilize in April when the Datong-Qinhuangdao railroad maintenance falls," a Guangdong-based trader said.
"Until then we may not make any purchases of overseas thermal coal."
The latest price cut by Shenhua Group, CONTINUED..................
The latest price cut by Shenhua Group, effective from March 1 onwards, has helped the Chinese coal producer to reduce coal stocks at its dedicated Huanghua port to about 1 million mt, down about 50% month on month, market sources noted.
Transactions were heard Friday for 5,500 kcal/kg NAR thermal coal at Qinhuangdao port at Yuan 515/mt FOB.
At the close of Asia trade Friday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 515/mt inclusive of VAT, unchanged from Thursday's price.
The CFR South China (CCI 8) price was assessed at $75/mt basis 5,500 kcal/kg NAR, excluding
Chinese VAT, and was steady on-day.
So prices are rising, finally, here some explanations of the abbreviated terms in this article so you can fully understand and appreciate the terms.
CFR- Cost of Freight
NFR- Fugitive Emissions released
NAR- Net as received
FOB- Freight on board(delivery not included)
VAT- Value Added Tax