China: Demand for low CV Indonesian thermal coal rises amid higher domestic prices

• Chinese offers higher than Indonesian ones by RMB 100/t
  
  
• Indonesia-China freights fall on abundant ship availability
  
  

Mysteel: Chinese buyers showed increased interest in Indonesian thermal coal with low calorific value (CV) on 25 October, considering its significant price advantages over comparable domestic cargoes, sources noted.

On 25 October, Mysteel assessed Indonesian 3,800 kcal/kg NAR thermal coal prices at $54/t FOB Kalimantan, unchanged since 15 October. This can be translated into RMB 492.4/t ($69/t) CFR South China with VAT, about RMB 104.4/t lower than comparable Chinese cargoes on the same basis, with port duties and other expenses excluded, according to Mysteel Global's estimation.

Sources shared that more inquiries emerged for low-CV Indonesian coal among Chinese traders last Friday, as they need to complete their short-covering purchases.

"Chinese end-users are still not in a rush to restock, with cooler weather curbing power consumption. However, we are not so bearish about the near-term market, as low-CV cargoes remain a cheaper option," said a South China-based trader.

A deal was heard concluded at $55.5/tonne (t) FOB for Panamax cargoes of Indonesian 3,800 kcal/kg NAR coal on Friday, while some were done at $53.3-54.3/t FOB for Supramax ones, Mysteel Global learnt.

Yet coal offers largely remained unchanged on Friday. Offers for November-loading Panamax cargoes of Indonesian 3,800 kcal/kg NAR thermal coal remained stable d-o-d at around $55-56/t FOB Kalimantan, against buying interest in a range of $53-53.7/t FOB.

Additionally, shipping rates from South Kalimantan to South China continued dipping due to abundant ship availability on the route and limited new inquiries. Freights for Supramax and Panamax vessels on the same route lost another $1/t w-o-w to $10/t and $7/t, respectively, sources informed.

For mid-CV cargoes, November-loading of Indonesian 4,700 kcal/kg NAR thermal coal on Panamax basis were generally offered at $76-77/t FOB, against buying interest of $72-74/t FOB Kalimantan, according to sources. Bids for Supramax cargoes of this grade were seen at $69/t.

Indonesian 5,500 kcal/kg NAR thermal coal was offered at $97/t FOB on Friday, equivalent to RMB 838.4/t CFR South China with VAT included. Mysteel's calculations show that this price, if port duties are factored in, is largely at the same level as China-mined grade shipped from its northern ports.

Elsewhere, availability of November-delivery high-CV thermal coal cargoes from Russia's Far East port remained limited, and suppliers are currently selling December-loading cargoes, sources told Mysteel Global, adding the recent trading prices for Russian 5,500 kcal/kg NAR coal were around RMB 865/t on CFR basis at ports along China's Yangtze River, with 13% VAT included.

It is said that South Korean power plants were also actively seeking Russian high-CV coal with premiums, sources noted. A 6,000 kcal/kg NAR shipment was sold at $119/t CFR South Korea on December loading.

Australian thermal coal prices remained solid, although China's demand was slightly curtailed by stable supplies from the domestic market. Offers for Australian 5,500 kcal/kg NAR coal were around $89-92/t FOB Newcastle for Panamax shipments. A deal of this grade on a Capesize basis was reportedly concluded at $91/t FOB early last week.

Freights for Capesize vessels from Newcastle to South China edged down to $13/t FOB or so last week, compared with $13.5/t a week earlier, and the rate for Panamax vessels on the same route dipped from $16/t to $14.5/t, sources reported.

In the Chinese domestic thermal coal market, trading liquidity remained subdued on Friday, resulting in a continuous rise in stockpiles at northern ports.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.