Indonesian thermal coal market has been thinly-traded in the holiday-shorten week, despite increased price advantage against Chinese domestic coal.

 

While the overall demand remained weak, some deals were still heard in the market. A Chinese trader bought a 3,800 Kcal/kg NAR Panamax cargo at $60/t FOB, for late January delivery.

 

An Indonesian miner reported some Chinese buyers started to lock January cargoes of the same grade at $59-60/t FOB on a Supramax basis, although Sxcoal couldn't confirm it immediately.

 

Offers for 4,500 Kcal/kg NAR cargoes were around $80-81/t FOB Kalimantan, while 5,500 Kcal/kg NAR cargoes with high sulfur (1.8-1.9%) were quoted at $93/t, another Indonesian miner informed. Trading activity for mid- and high-CV grades were not heard.

 

Chinese traders were overwhelmingly bearish about the market direction, especially following a pickup in temperatures in China, which would dampen coal burns at coastal power plants whose coal stockpiles remain elevated at present.

 

"Many power plants have wrapped up coal bookings for January delivery," a Chinese trader noted. "For February, utilities will definitely scale back purchases as demand is typically the lowest because of the Spring Festival."

 

Utilities are still seeking late-January cargoes through tenders. On December 27, a Guangdong-based utility reportedly awarded a 3,800 Kcal/kg NAR cargo at 540 yuan/t DDP with VAT, netting back to $58/t FOB on a Panamax basis. The price, however, is about $2-3/t lower than prevailing spot prices.

 

This price mismatch discouraged Chinese traders from buying spot coal to cover their short positions, contributing to thin trading liquidity in the market.

 

This came despite the spot prices posting a bigger price advantage against Chinese domestic comparable coal.  

 

According to Sxcoal's estimates, Indonesian 3,800 kcal/kg NAR coal now enjoys a price edge of 104.3 yuan/t on a CFR South China with VAT basis compared to same-quality Chinese domestic coal from north China ports, up from 98.4 yuan/t a month earlier. The price edge also outweighed 16.8 yuan/t on the same day a year earlier.

 

As Chinese domestic thermal coal prices have edged lower this week, the spread has narrowed from 125.5 yuan/t a week earlier.

 

On December 27, the CCI index for Indonesian 4,700 Kcal/kg NAR thermal coal was at $90.5/t CFR South China and $82.5/t FOB, both unchanged from a day earlier. The CCI index for Indonesian 3,800 Kcal/kg NAR coal was assessed at $67.6/t CFR, dropping $0.4/t but stable at $58.5/t FOB.

 

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