Demand from China for seaborne import thermal coal has yet to heat up although temperature declines have driven up coal burns and depleted stocks at power plants.

 

As of December 18, coal stockpiles at key power plants in the coastal provinces were able to cover 14.6 days of use, down from 15.7 days a week earlier. The stocks were just above the safe level of 14 days.

 

A possible reason for the inactive demand could be that utilities have enough supplies for December delivery, one source pointed out, noting current tenders are mainly for month-ahead arrivals.

 

Chinese traders also didn't rush to purchase as they still faced potential losses if buying from the spot market to cover their short positions, only depending on long-term contracts with foreign miners.

 

"Buying interest remains patchy," said a Chinese trader. "Buying spot 3,800 Kcal/kg NAR coal to fulfill utilities' tender remains in a loss."

 

While domestic transport disruptions due to bad weather and falling stockpiles added short-term upside to seaborne demand expectations, Chinese buyers remained price sensitive, confirmed an Indonesian miner, potentially pressuring import prices.

 

Last week, Chinese utilities awarded import tenders for 3,800 Kcal/kg NAR coal at 548-551 yuan/t DDP with VAT, while some 5,500 Kcal/kg NAR cargo was awarded at 960 yuan/t.

 

Some January-loading Australian 5,500 Kcal/kg NAR coal was traded at 930 yuan/t CFR with VAT for prompt delivery. "The majority of cargoes are traded on an index-linked basis, as fixed prices are too high," said another Chinese trader.

 

Shipping rates from Australia to South China were around $19-20/t for Capesize vessels and around $18/t for Panamax.

 

Indonesian 3,800 Kcal/kg NAR coal for delivery in January was offered at $59-60/t FOB Kalimantan on Supramax basis, against bids of $58/t. Some Panamax cargoes with inferior quality were offered at $60/t.

 

On December 20, the CCI index for Indonesian 4,700 Kcal/kg NAR thermal coal was at $91.0/t CFR South China and $82.7/t FOB, both flat from a day earlier. The CCI index for Indonesian 3,800 Kcal/kg NAR coal was also assessed stable at $68.0/t CFR and $57.5/t FOB.

 

The CCI index for Australian 5,500 Kcal/kg NAR coal was stable at $112.0/t CFR South China.