Sentiment lifts in Indonesian low-CV coal market

Details also began to emergethat Chinese state-owned utility Huadian earlier this week awarded two Panamaxes of NAR 3,800 kcal/kg (GAR 4,200 kcal/kg) Indonesian coal at around 338 yuan/t cfr Fujian plus value-added tax (VAT) for delivery in October. The price nets back to about $31.50/t fob Indonesia.

The award price of the NAR 3,800 kcal/kg coal appear on the low side now, market participants said, given that Indonesian coal producers have lifted their offers since last week after consecutive weekly price falls since early July.

Huadian also bought a Panamax of NAR 4,700 kcal/kg (GAR 5,100) Indonesian coal through the same tender at Yn449/t cfr Fujian plus VAT for October arrival. The price nets back to $46.60/t fob Indonesia.

But traders reported a further increase in enquiries from Indian buyers seeking post-monsoon cargoes, A market view is developing that the GAR 4,200 kcal/kg market has already found a floor above $30/t.

Trades in the GAR 4,200 kcal/kg spot market have been slow to emerge this week, although bids for September- and October-loading geared supramax cargoes were in a $30.50-31/t range, which was up slightly from yesterday's $30-31/t. Offers were around $31.50-32/t compared with yesterday's$31-33/t range.

Trade in the ICI 4 derivatives market was muted today after a total of 30,000t traded yesterday, when 15,000t of October and 15,000t of November contracts traded as part of a package, both at $31.50/t.

Bids and offers in the derivatives market were also scarce today, with October bid at $31.75/t and offered at $31.85/t. By comparison the last Argus assessment price for October ICI 4 futures was at $31.45/t yesterday.

The fob Newcastle Australian market saw a September-loading Capesize cargo of NAR 5,500 kcal/kg coal traded at $48/t fob. But this could not immediately be confirmed and is irrelevant to the index, which rolls over this week to capture October- and November-loading cargoes.

But market participants remain mostly concentrated on very prompt trading.

At least one producer yesterday lowered its offer level for September-loading Capesizes of NAR 5,500 kcal/kg coal to $47/t fob Newcastle. By comparison the best confirmed offer reported to Argus last week was at $48/t fob Newcastle for a cross-month September-October Capesize, with the bulk of offers around $49/t fob Newcastle. The assessment was priced at $47.85/t fob Newcastle for the week ended 30 August, down by $1.36/t.

An October-loading Panamax in the NAR 6,000 kcal/kg market traded at $60/t fob Newcastle over the counter. A 25,000t clip traded on screen at $66/t fob Newcastle for December loading but this was also irrelevant to the Argus index.

China's domestic market saw bids for domestic NAR 5,500 kcal/kg coal around Yn575-580/t fob north China ports, with offers around Yn580/t, both steady from yesterday.

China's futures market had the September contract on the Zhengzhou commodity exchange close at Yn573.80/t today, down by Yn0.20/t from yesterday. The most actively traded November contract closed at Yn584.20/t, up by Yn1.80/t from yesterday.