Trade Resources Industry Views You Can Still Sell Coal to China, But Prices Are an Issue

You Can Still Sell Coal to China, But Prices Are an Issue

Spot deals for Indonesian thermal coal were hard to come by as bids from both Indian and Chinese buyers are not firm due to rising freight rates, sources said Tuesday.

"You can still sell coal to China, but prices are an issue," a Singapore-based trader said.

Platts assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $56.50/mt, down 15 cents on the day, while FOB Kalimantan 5,900 kcal/kg GAR coal was assessed at $70/mt, unchanged on the day.

Platts assessed the prices of FOB Kalimantan 4,200 kcal/kg GAR coal at $38/mt, while FOB Kalimantan 3,800 kcal/kg GAR was assessed at $32/mt, both unchanged on the day.

Chinese power plants are open to buying either domestic or imported material of 3,800 kcal/kg NAR -- or 4,200 kcal/kg GAR -- coal, but they can pay only $47/mt CFR south China for Supramax or Panamax shipments, he said.

With freight rates of about $9/mt being quoted for Panamax vessels from South Kalimantan to south China, FOB price nets back to about $38/mt, he said, adding that profit margins for traders are getting squeezed.

"Some of the Indonesian miners are saying they do not have spot cargoes and traders who have positions are offering in the market," he said.

Chinese traders are willing to pay only about $36/mt FOB for 3,800 kcal/kg NAR coal, he said, adding that deals could, however, be concluded at only between $38-38.25/mt FOB.

A Handysize cargo of 4,200 kcal/kg GAR Indonesian coal was being offered into the Chinese market at $38.60/mt FOB, or about $49/mt CFR, for March delivery but has attracted little buying interest.

"Some of the traders who have taken positions on coal cargoes are finding it difficult to sell in the market. They are all stuck up now," a Mumbai-based trader said.

He said Indian demand had been slow in recent days and not many firm bids or offers were being seen.

DEALS ON CREDIT

Some Indian end-users are buying 4,200 kcal/kg GAR coal at about $39-39.50/mt FOB if they are given 90-day or 180-day credit, he said, but added that deals on letter-of-credit basis could be possible at between $38-38.50/mt FOB.

A second Mumbai-based trader said demand for 3,800 kcal/kg GAR coal was muted in India, but deals could possibly be concluded at about $31.75-32/mt FOB if bids were firm.

However, Indian buyers are skeptical about concluding deals currently as freight rates have shot up in recent days, he said.

Panamax freight rates from South Kalimantan to the west coast of India were as high as $11/mt and to the east coast at $9.50-9.60/mt, he added.

"Indian buyers are looking to buy coal at cheaper prices on FOB basis because of this," he said, referring to the rising freight rates.

Cargo availability is not an issue in Indonesia, the Indonesia-based trader said, adding that blended cargoes of 5,000 kcal/kg GAR coal were still being widely offered even as demand was muted.

For cargoes of 5,000 kcal/kg GAR coal, bids from India were as low as $54/mt FOB, the first Mumbai-based trader said, but counter offers were not immediately available.

"We expect [Chinese] demand in the second quarter to be worse than the first quarter. But Indonesian suppliers are offering at the same level as Q1," a Shanghai-based trader said.

He was looking to buy some Panamax cargoes of 4,700 kcal/kg NAR -- or 5,000 kcal/kg GAR -- branded coal at $55-56/mt FOB for April-delivery, but offer prices were close to $58-59/mt, he added.

Source: http://news.chemnet.com/Chemical-News/detail-2257646.html
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Spot Deals for Indonesian Thermal Coal Difficult as Firm Bids Rare
Topics: Metallurgy