Asia Pacific Coal – Newcastle index falls to 6-month low

5-Nov-2018

The Asia-Pacific benchmark Newcastle index has fallen to near six-month lows as a lack of Chinese demand has resulted in some surplus in supply.

Broker Global Coal’s benchmark Newcastle [Australia] index was assessed last at USD 105.05/t, down by 3.2% on the week – the lowest level since mid-May.

A December-loading Newcastle cargo traded early on Thursday, via Global Coal, at USD 101.95/t, down USD 0.30 from a similar trade on Wednesday.

“There’s more supply than demand,” said a Singapore-based coal broker.

Some participants predicted demand from China to increase over the coming weeks.

“We’ll see if China starts to fill its book for January this [month], when import quotas will be back to zero. It’ll depend if demand is there,” said a coal analyst.

Many Chinese importers have already reached their government-imposed import quotas for 2018, meaning they are unable to purchase more coal for Q4 delivery.

The country’s Zhengzhou front-month thermal coal futures contract settled last 1.4% lower on the week at CNY 635/t (USD 91.14/t).

One analyst said on Wednesday that any slowdown in the Chinese economy – amid the ongoing trade spat with the US – could dampen the country’s import appetite, and therefore have bearish implications for global coal prices.

Indian demand

Meanwhile, there were some signs of improved Indian import demand, with inventories at 122 of the country’s coal-fired plants rising for the first time since July – by 5% on the week to around 10m tonnes – according to India’s Central Electricity Authority.

But this was still only marginally higher than last week’s 11-month low of just 9.5m tonnes.

And one Indian trader said the rise more reflected lower generation demand rather than a step-up in import activity.

Price indicators (week on week change):

• Global Coal Newcastle index – USD 105.05/t (USD -3.44)
• Global Coal Richards Bay index – USD 97.79/t (USD -1.64)
• Zhengzhou (ZC) thermal coal futures, January contract – CNY 635/t (CNY -8.80)

Stocks and Queues:

• PWCS Newcastle (Australia) stocks – 1.44m tonnes (-0.05m tonnes)
• PWCS vessel queue – 4 vessels (-6 vessels)
• Indian power plant stocks – 10m tonnes (0.5m tonnes)
• Indian power plant stocks in days – 6 (unchanged)

Source: MONTEL