Pacific basin coal firms on rising spot demand

28-Jan-2019

Pacific basin coal prices have firmed amid a tentative rise in spot demand, although sluggish Chinese buying capped gains, participants said on Thursday.

Broker Global Coal’s benchmark Newcastle (Australia) index was last assessed at USD 99.20/t, up by a marginal 0.4% on the week.

There has been some rise in demand, with a number of trades concluded in recent days.

A February-loading 50,000t cargo changed hands on Wednesday at USD 96/t.

There was some demand from India – particularly for Indonesian material – although healthy stocks meant there was no urgency to buy, participants said.

Inventories at 125 coal-fired plants, monitored by India’s Central Electricity Authority, were assessed last up 4% on the week at 18.7m tonnes – the highest since May 2017.

This is sufficient for 11 days’ generation.

Yet, with Chinese import demand still weak ahead of next month’s Lunar New Year celebrations, further price gains could be limited, participants said.

“Chinese offtake from the market is expected to remain weak for the next two weeks,” said a Chinese coal analyst, with an energy firm.

“For now, consumption is weak, partially due to mild weather,” she said.

China’s Zhengzhou May thermal coal futures contract settled last down 5% on the week at CNY 576/t (USD 84.84/t).

Supply issues

Meanwhile, there were some lingering supply concerns, with heavy rain continuing to cause disruptions to coal shipments from Indonesia, the world’s largest thermal coal exporter.

“Almost every day it is raining heavily, so it is a problem for all shipments,” a trader in Samarinda, a key export hub in the coal-rich East Kalimantan region, told Montel on Wednesday.

There were also some ongoing threats to Australian exports – linked to industrial action by rail and port workers – although this would predominantly impact coking coal shipments, participants said.

Rail workers with Australia’s largest rail freight company, Aurizon, will begin a seven-day ban on all overtime at coal depots from Friday.

A similar ban prior to Christmas resulted in approximately 135 services being cancelled.

And Port Kembla coal terminal workers will strike for seven days from Saturday, due to an ongoing dispute related to a new enterprise agreement.

Source: MONTEL