A small upturn in prices for sub-5,000 kcal/kg NAR Chinese thermal coal on perceived stirrings of restocking activity for the upcoming northern hemisphere winter and some market tightness was seized on by traders Friday.
South China prices for imported thermal coal with a calorific value of 5,500 kcal/kg NAR were rangebound Friday at $77/mt CFR in a thinly-traded seaborne market ahead of China's National Day holiday next week.
Some business was heard concluded in the Chinese market for very prompt delivery cargoes.
A Capesize cargo of 5,500 kcal/kg NAR Australian thermal coal for immediate loading was heard sold in the Chinese market at $61.50/mt FOB, or some $78.50-79/mt CFR on a delivered price.
Suppliers have been forced to lower their FOB prices by about $1-1.50/mt over the trading week because of relatively high cost vessel freight, a Singapore-based broker said.
A distressed Panamax cargo of 5,500 kcal/kg NAR South African thermal coal was heard offered at 78.50/mt CFR South China for early October delivery, according to a Guangdong-based trader.
"This is a bit lower than offers for spot cargoes, but it's not acceptable to my customers," he said, adding that few enquiries have been forthcoming from end users for November-arrival cargoes.
Australian 5,500 kcal/kg NAR maximum 23% ash thermal coal was bid for October at $77.50/mt CFR to offers at $78/mt, and the price spread for November cargoes of this coal was $78-78.50/mt, as heard through broker Marex Spectron, and prices were level on the day.
For cargoes of South African origin 5,500 kcal/kg NAR bid and offer prices were generally 25 cents lower than for Australian cargoes of the same calorific value, as heard through the same broker.
FOB Newcastle high-ash cargoes were bid at $60.50/mt to offers of $61/mt in Asia trade for October loading, and bids on November cargoes of this coal were at $61.25/mt to offers of $61.75/mt, as heard through Marex Spectron Friday.
In the screen-traded market for Newcastle 6,000 kcal/kg NAR thermal coal Friday, there was a trade for a 25,000 mt November-loading parcel in the Asian window at $78.75/mt FOB on globalCOAL, and down $1/mt on a trade Thursday for this month, also for 25,000 mt.
Platts assessed the CFR price for cargoes of 5,500 kcal/kg NAR thermal coal for shipment to South China ports in the next 15-60 days at $77.10/mt, stable from Thursday.
Typical 20% ash Newcastle 5,500 kcal/kg NAR thermal coal for loading in the next 7-45 days was assessed at $62.50/mt FOB, also stable.
Traders in the seaborne market have been anxiously awaiting a recovery in domestic thermal coal prices from their low base to infuse some extra demand into a lackluster spot market for imported thermal coal.
China's largest miner of domestic thermal coal in China, Shenhua Group, has added Yuan 5-10/mt to its selling prices for coal with a calorific value under 5,000 kcal/kg NAR for customers in northern China, according to Chinese traders.
For customers in southern China a price increase of Yuan 3-5/mt has been applied to sub-5,000 kcal/kg NAR domestic thermal coal from October, market sources said.
Price increases may be resisted by power plants which have been told to lower their power tariffs for consumers.
"Considering the stock levels at power plants, the rise may not be acceptable," a Guangdong-based trader said, adding that average stockpiles at his utility customers had increased to around 20 days' burn from 17 days two weeks ago.
At Qinhuangdao port, 5,000 kcal/kg NAR thermal coal was trading at Yuan 380/mt excluding VAT ($62/mt), according to a Guangdong-based trader who recently purchased a Handymax-sized cargo of this coal for immediate delivery.
"The supplier has been less proactive in coal sales than in August, and they even demanded full payment in cash in advance," the Guangdong-based trader said.
The nascent recovery has yet to spread to prices for domestic 5,500 kcal/kg NAR thermal coal, cargoes of which were available at Qinhuangdao port at Yuan 430/mt FOB, steady over the trading week, said market sources.
"The domestic thermal coal market may not see any substantial recovery until the second half of 2014," said a trader based in Shanxi province.
