Sub-zero freeze in China spurs thermal coal imports

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FOB Newcastle 6,000 kcal/kg trades at $108.25/mt as the freezing temperatures in Beijing to continue until end of Jan. Sub-zero temperatures in parts of northern China are driving power plant thermal coal consumption higher and stimulating additional demand for import cargoes, market sources said Thursday.

A China-based source said: “It has been snowing in the north,” adding that an influx of imported coal had helped Chinese power plants meet the stronger electricity demand.

Daytime temperatures in Beijing are forecast to stay below zero degrees Celsius until the end of January, according to weather data.

The colder weather in China has both raised demand for domestic thermal coal and contributed to upward pressure on prices at northeastern dispatch ports for the coastal coal trade such as Qinhuangdao, the source said.

Spot prices for 5,500 kcal/kg NAR domestic thermal coal were heard to trade at Yuan 735-740/mt FOB Qinhuangdao, with offers heard at Yuan 745/mt.

For the 5,000 kcal/kg NAR grade FOB Qinhuangdao, prices were in the range of Yuan 655-660/mt, said sources.

Qinhuangdao spot prices have stabilized after some Chinese producers lowered their offers for long-term customers by Yuan 10-20/mt over the past week, said the China-based source.

A meeting of China’s National People’s Congress in early March is expected to shed more light on price direction for domestic thermal coal.

Seaborne thermal coal offer prices remain firm in the view of Chinese traders who believed Beijing may maintain a benign policy on imports through to March.

Offers for February shipments of Newcastle 5,500 kcal/kg NAR thermal coal were heard at $85-$86/mt FOB in Asia trade, though buyers were keeping a low profile with their bids.

Australian thermal coal producers have been pushing more Newcastle 5,500 kcal/kg NAR coal into their wash plants to produce Newcastle 6,000 kcal/kg NAR thermal coal in order to benefit from higher market prices.

Japanese-specification thermal coal from Australia trended higher in Asia trade, with a February 25,000 mt shipment trading on the globalCOAL screen at $108.25/mt FOB, up on the last traded level of $107/mt on Friday.

Higher trending Newcastle thermal coal prices are leading to higher delivered prices at Japanese ports for arriving cargoes, although this is being offset slightly by a small decline in indicated Panamax vessel freight on the Newcastle to Japan trading route.

Neat Index rises again

The S&P Global Platts Northeast Asia Thermal (NEAT) coal index based on Panamax cargoes shipped to Kinuura port in Japan rose 20 cents/mt day on day to settle at $104.45/mt CFR Japan, the highest to date in its year-long history.

Indonesian 4,400 kcal/kg NAR thermal coal was offered at $65/mt FOB Kalimantan in gearless-vessel cargoes for February loading, sources said.

Offers for H2 February Panamax shipments of Indonesian 3,800 kcal/kg NAR coal were at $49.50/mt FOB, and a H2 of January-loading gearless-vessel cargo of this grade had traded at $49/mt, said one trader in north China.

He pegged the tradable level for this grade at $49-$49.50/mt FOB based on gearless-vessel cargoes.

A geared-vessel shipment of Indonesian 3,800 kcal/kg NAR coal was traded at $49.10/mt FOB for H1 February loading, and there was an offer at $50/mt FOB for the same period, traders said.

Some Indonesian 3,400 kcal/kg NAR coal was offered at $38.85/mt FOB Kalimantan in geared-vessel cargoes for H1 February loading, but few bids were shown for these cargoes, sources said.

Source: PLATTS