Widespread bearish sentiment across the Chinese thermal coal market kept imported thermal coal prices under pressure Wednesday, despite a dip in vessel freight rates, sources said.
The Platts/Fenwei CCI 8 price for 5,500 kcal/kg NAR imported thermal coal was assessed at $66.10/mt, excluding Chinese VAT, down 15 cents/mt.
Chinese buying interest in October and November-delivery cargoes of 5,500 kcal/kg NAR seaborne-traded thermal coal has remained muted, sources said.
Offers for October-loading Capesize cargoes of Australian 5,500 kcal/kg NAR were at $55-55.50/mt FOB, while buying interest was at $54-54.50/mt FOB said one China-based trader.
Freight for Capesize ships from Newcastle, Australia, to South China he pegged at $11-11.50/mt, adding: "It was at $13/mt last month".
An October-loading mini-Capesize cargo of Australian 5,500 kcal/kg NAR coal was heard offered at $56/mt FOB, or $66.50/mt CFR South China.
Chinese bidding interest has slipped below $66/mt CFR, sources said.
"Purchase prices from local utilities for such 5,500 kcal/kg NAR coal have dropped towards $65.50/mt CFR," a Fujian-based trader said. "We would like to talk the price down to $65/mt CFR."
A Shandong-based trader said his company will not take the initiative and import October-November delivery cargoes unless it first has downstream bidding interest.
CAUTIOUS CHINESE TRADERS
More and more Chinese traders are being cautious about taking imported thermal coal, partly because of weak downstream demand, and partly due to the recent coal import restriction measures set by the government, sources said.
A second Fujian-based trader placed the fair value of Australian 5,500kcal/kg NAR coal at $66/mt CFR South China.
"The market is pretty low and the sentiments bearish at the moment," an Australia-based trader said.
Offers for October-loading Capesize cargoes of Australian 5,500 kcal/kg NAR coal were at $67/mt CFR South China, while buying interest was at $66/mt CFR South China, he said.
The Chinese economy is underperforming expectations and the government is more inclined to pollution control, a China-based end-user said.
"The peak season for demand has passed on for this year, and the inventory level is also a bit higher than normal," he said.
In the FOB Australian high ash market, a November-loading Capesize cargo was being offered at $55.50/mt FOB, basis 5,500 kcal/kg NAR, and bid at $53/mt FOB, on the same basis, according to an Indian trader.
Elsewhere, a December-loading cargo of this origin and grade was seen offered at $56/mt FOB, basis 5,500 kcal/kg NAR, and bid at $54/mt FOB.
Platts assessed the FOB price of Newcastle 5,500 kcal/kg NAR thermal coal with typical ash of 20% at $55.60/mt, down 20 cents/mt. The ash differential for this grade of Newcastle thermal coal was assessed at unchanged $0.47/mt per 1% ash basis.
Meanwhile, demand for domestic 5,500 kcal/kg NAR thermal coal has remained limited, sources said.
The Chinese market is oversupplied at the moment, the China-based trader said, adding: "There are plenty of products available and the power plants have options. Most of the miners feel that the current price for domestic 5,500 kcal/kg NAR is too low and should be increased, as around 70% of the miners are losing money".
Spot prices for domestic 5,500 kcal/kg NAR coal were in the range of Yuan 470-480/mt, he said.
The Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 474.50/mt inclusive of VAT, down Yuan 0.50/mt.
