A higher-than-expected increase Wednesday in FOB prices at China's Qinhuangdao port for 5,500 kcal/kg NAR domestic thermal coal gave a lift to imported thermal coal prices which advanced to $79/mt basis South China ports, said market sources.
An Australian high-ash cargo for late November loading was heard to trade at $79.50/mt in China's seaborne market, and after this trade, buying interest for seaborne 5,500 kcal/kg NAR cargoes immediately went to this level, said traders.
A late November-loading Australian high-ash cargo for 130,000 mt heard bid at $79.50/mt CFR South China toward the end of Asia trade, and sellers too raised their offer prices to $80/mt CFR basis.
CFR South China cargoes originating from Australia and South Africa were bid at $78/mt for November arrival to offers 50 cents higher, said broker Marex Spectron. For December delivery, the bid-offer spread was $78.50-79/mt for Australian cargoes and 30 cents lower for South African basis 5,500 kcal/kg NAR, said the broker based in Singapore. Freight costs on the trade route from eastern Australia to South China have steadied to around $12/mt this week, allowing FOB prices at Newcastle port to inch higher to $66/mt for late November and December-loading cargoes. "FOB prices have recovered since a week ago, and producers are hesitant to give price discounts on cargoes," said one market participant.
Capesize cargoes of maximum 23%, 5,500 kcal/kg NAR Australian thermal coal for shipment in December were heard offered to Chinese buyers as high as $68/mt FOB, according to a Guangdong-based trader.
"We will not take the offer unless the price can be talked down to $66/mt FOB," the Guangdong trader said.
December and January-loading Newcastle high-ash, 5,500 kcal/kg NAR ships were bid at $66.50/mt FOB through Marex Spectron to offers at $67/mt, and November cargoes were at $66-66.50/mt.
The Chinese trader was not alone in believing that prices for seaborne-traded cargoes had limited upside.
"We do not think the market will improve much in Q1 2014," he said. A Singapore-based trader agreed: "The Q1 market is not going to be $2-3/mt higher than the current price level [for 5,500 kcal/kg NAR Australian and South African thermal coal], that is for sure."
China's domestic 5,500 kcal/kg NAR thermal coal was fetching about Yuan 545/mt ($89.45/mt) FOB at Qinhuangdao port, and its price has ticked up steadily over the past week, and stood at Yuan 465/mt on a net of VAT basis.
A Guangdong-based trader was heard to conclude a transaction for a 50,000 mt cargo of 5,500 kcal/kg NAR domestic thermal coal from Shanxi province at Qinhuangdao port for loading in the next 7-45 days at Yuan 550/mt FOB.
This trade may have been an exception, as most buying interest lay at Yuan 545/mt to offers at Yuan 550/mt, according to market sources.
At the close of Asia trade Wednesday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 547/mt inclusive of VAT, and was Yuan 3/mt higher on day.
The CFR South China (CCI 8) price was assessed at $79.20/mt basis 5,500 kcal/kg NAR excluding Chinese VAT, and the joint assessment was 40 cents higher on day.
Platts' price assessment for CFR South China cargoes of 5,500 kcal/kg NAR thermal coal for arrival in South China ports in the next 15-60 day period came out at $79/mt Wednesday, and was 50 cents higher than the previous day's assessment.
For FOB Qinhuangdao 5,500 kcal/kg NAR thermal coal for delivery in the next 7-45 day period Platts assessed this price at Yuan 465/mt excluding VAT, and Yuan 5/mt higher than Tuesday.
Typical 20% ash Newcastle 5,500 kcal/kg NAR thermal coal for loading in the next 7-45 day period was assessed at $66.50/mt FOB, and the assessment was up 50 cents from a day earlier.
