The focus in the Chinese spot market was back on domestic thermal coal prices, which buckled in Asia trade and caused buying interest on cargoes of imported fuel to sink below $75/mt CFR South China in many cases, said market sources.
Power stations and end-user buyers in China have been flocking to the domestic market as China's larger coal producers engage in a price-discounting cycle which has undercut seaborne cargo prices.
A Jiangsu-based trader said after purchasing a 20,000-30,000 mt cargo of 5,500 kcal/kg NAR domestic coal at Yuan 515/mt ($83.95/mt) FOB Qinhuangdao port for immediate delivery: "Tradable prices for domestic coal are around Yuan 510-520/mt FOB."
Some Chinese traders were prepared to call a bottom to recent price falls for Qinhuangdao coal, and suggested a recovery in domestic 5,500 kcal/kg NAR FOB Qinhuangdao prices could occur in April when intermittent maintenance interrupts rail deliveries to the north Chinese port.
"Shenhua has achieved what it wanted by cutting prices. It may not want to cut its prices again this month," said a Shanghai-based trader.
Smaller and medium-sized coal producers in China were among the most aggressive sellers in Friday's market, as some seek to unload their remaining stock with a view to existing the business, said sources in China.
In the seaborne market for China, April-arrival high-ash Australian cargoes were heard to trade this week at around $75.50/mt CFR in a thin market as Chinese buyers drove hard bargains.
A Capesize cargo of Australian 5,500 kcal/kg NAR coal was being offered Friday at slightly above $76/mt CFR South China for April arrival, while bids were at $75.50/mt CFR, as heard through broker Starfuels.
"The arbitrage into China for imported thermal coal is closed," said one market participant in Singapore.
April-May delivery cargoes of 5,500 kcal/kg NAR Australian thermal coal were heard offered at about $77/mt CFR southern China, but Chinese bids were still about $2/mt lower than that, according to several Chinese traders.
Cargoes of Australian 5,500 kcal/kg NAR thermal coal for arrival in southern China in April were bid at $73-74/mt CFR basis, as heard through broker Marex Spectron.
Offer prices for FOB 5,500 kcal/kg NAR Capesize cargoes were $1 lower compared with a day or two ago at $64/mt for April and at $63.50/mt for May shipment, to bids for these months at $61.75/mt and $62.25/mt, respectively, as heard through the broker Friday.
Some Panamax cargoes of 5,500 kcal/kg NAR Australian coal were heard offered in the Chinese market at $61-62/mt FOB for April and May delivery, according to a Shanghai-based trader.
With freight rates at $14/mt for Panamax cargoes from Australia to China, however, the offer would arrive at $75-76/mt CFR China, higher than current spot market prices, the trader noted.
"We can only take the coal at no higher than $60/mt FOB," he said.
"I got an offer for an April-loading 130,000 mt cargo of 5,500 kcal/kg NAR Australian thermal coal at $61.50/mt FOB, but we will not take it unless the price can be talked down to about $60/mt FOB," a trader in Shandong province said.
Newcastle 6,000 kcal/kg NAR thermal coal prices traded higher on-screen Friday, despite the ending of an industrial dispute affecting Aurizon's New South Wales coal haulage division.
In Asia trade Friday, a deal was struck on-screen at $74.50/mt FOB for a May 25,000 mt parcel, and this trade represented a $0.65/mt premium to May paper prices, and was up $2.25 from a physical trade Wednesday for the same delivery month at $72.25/mt on globalCOAL.
At the close of Asia trade Friday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 517.50/mt inclusive of VAT, and was Yuan 2.50 lower than Thursday's price.
The CFR South China (CCI 8) price was assessed at $75.40/mt basis 5,500 kcal/kg NAR, excluding Chinese VAT, and was 10 cents lower than Thursday's assessment.
