Indonesian thermal coal started gaining strength this week on the back of emerging demand from China after being muted for weeks, although it still takes time for a full recovery.
It is learned that some Chinese buyers bought Indonesian 3,800 Kcal/kg NAR thermal coal at $90.5-91/t FOB on a Panamax basis, a little higher than a previous week.
This came along with price rises in the Chinese domestic thermal coal market, where the benchmark 5,500 Kcal/kg NAR thermal coal increased by around 50 yuan/t this week to 1,350 yuan/t FOB northern ports with VAT.
The rising domestic thermal coal prices pushed Chinese buyers to put their eyes back on Indonesian thermal coal. Recent utilities' awarded prices also rose modestly and supported the market.
Chinese buyers have been sitting on the sidelines for weeks as Indonesian cargoes were more expensive than Chinese domestic coal. The freight increase and Yuan's depreciation also contributed to the slackness.
In May, Chinese ports received a total of 9.46 million tonnes of Indonesian coal, slumping 33.1% month on month and 27.6% year on year, Kpler's cargo-tracking data showed. This drove down the total seaborne coal imports from all origins to 15.32 million tonnes last month, down 26.4% month on month and 36.1% year on year.
Chinese buyers are mainly for low-CV Indonesian coal at present as medium- and high-CV cargoes have higher premiums to Chinese coal resulted from strong demand from Japan, South Korea and Europe.
A Supramax deal for 3,400 Kcal/kg NAR on June loading was concluded at $72/t FOB, according to an east China-based trader. Currently, many offers are index-related, with some seen at a $1-3/t premium for Surpamax and $3-5/t for Panamax, basis 3,800 Kcal/kg NAR.
However, most Chinese buyers are still staying out of the market. "Not many Chinese buyers have buying interest unless they have signed long-term agreements with miners," said a Guangdong-based trader.
Shipping rates increased this week. For the route from South Kalimantan to South China, the Panamax freight rose to $14/t and the Supramax freight to $19/t, traders said.
(Writing by Alex Guo Editing by Tammy Yang)
For any questions, please contact us by inquiry@fwenergy.com or +86-351-7219322.