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Asia thermal coal prices supported ahead of Lunar New Year

Singapore (Platts)--8 Feb 2018 1143 pm EST/443 GMT


Logistics issues in Qinhuangdao's coal supply chain, a stronger Yuan, and colder temperatures in China all supported seaborne thermal coal prices Thursday as activity started to wind down ahead of the Lunar New Year holiday.

"If the shortage of railway capacity in China is not solved it will not change the market at all," a trader in north China said. "It is still winter in China; this is not time for prices to crash," he added.

Another trader in north China said the Yuan's appreciation against the US dollar was another supportive factor for seaborne thermal coal prices.

"It looks like the market has stabilized at a high level and may find support to the end of March," he added.

Dry bulk freight on the Newcastle to China route has softened this week, with a fixture heard at $9.60/mt for a 130,000 mt ship, early March loading, for arrival at Lanshan port in Northeast China , sources said.

There was a slump in screen-traded prices for FOB Newcastle 6,000 kcal/kg NAR thermal coal in Thursday's Asia trading session after a March-loading parcel for 25,000 mt traded at $103.50/mt. This was several dollars lower than the trade for this grade and month of delivery at $107/mt FOB Newcastle Monday on globalCOAL.

In the Newcastle high ash market, a March-loading Capesize cargo was offered at a $3/mt premium to another 5,500 kcal/kg NAR index, sources said.

An Indonesia-based producer said more people were concerned about the impact of China 's price cap on domestic 5,500 kcal/kg NAR coal after the Lunar New Year.

Spot Indonesian coal cargoes were difficult to find. Many miners were sold until April and some were grappling with delayed loadings due to rain.

"The seas are rough for loading cargoes, so it's difficult to ship," the producer said.

INDIAN BUYERS ANTICIPATE LOWER PRICING

A firm bid was heard for a Panamax shipment, 4,800 kcal/kg GAR coal , at $70.50-$71/mt FOB Kalimantan.

A south India-based trader said he heard bids for a March-loading geared shipment 4,200 kcal/kg GAR coal at $49/mt FOB to offers at $51/mt.

"Buyers are holding off from purchasing after news that China was capping its 5,500 kcal/kg NAR coal price," he said. "They expect prices to go down," he added.

A trader in Thailand said he heard a bid for this grade at around $49/mt FOB for a geared-vessel cargo loading in March, to an offer at $52/mt.

A west India-based trader said India's power production has been decent and the plant load factor was averaging 60%-70%.

He heard a bid for an end February to early March loading geared-vessel shipment of 4,200 kcal/kg GAR coal with 0.2%-0.3% sulfur at $52/mt FOB.

Indonesian 3,800 kcal/kg NAR coal was offered to buyers in China at $51.75-$52/mt FOB Kalimantan, Panamax cargoes, March loading, to a bid at $51.60/mt, a trader in Singapore said.

South African 6,000 kcal/kg NAR prices had seen a drastic correction in recent days and were around $90.50/mt FOB, which had Indian buyers thinking Indonesian prices may follow suit, a south India -based trader said. South African 5,500 kcal/kg NAR coal was being offered at a discount of $8/mt to 6,000 kcal/kg NAR coal prices, while buyers were seeking a $9.50/mt discount, sources said.

-- Arusha Das, arusha.das@spglobal.com

-- Mia Corazon Aureus, mia.corazon.aureus@spglobal.com

-- Michelle Zhao, michelle.zhao@spglobal.com

-- Mike Cooper, michael.cooper@spglobal.com




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