Prices for low and higher calorific value thermal coal traded at Australia’s Newcastle trading hub fell further Friday, as buyers in China refused to be drawn into the spot market by the promise of discounted-price cargoes, said market sources.
Sellers were hastily rethinking their price offers for 5,500 kcal/kg net as-received cargoes for delivery in the next 7-45 days, as buyers in China wound back their bids to between $90-$95/mt FOB Newcastle in the week ended November 25.
“5,500 kcal/kg NAR from Australia has flopped. The market is now bid at $90-$95/mt FOB Newcastle,” said one Asia-Pacific market participant.
“China has been buying ahead of the curve and they are now looking for March-delivery cargoes, and not so much for January and February,” he added. Offers weakened to $95/mt FOB Newcastle, down $1-$2/mt from $96-$97/mt FOB on November 18, said market sources.
“For Australian 5,500 kcal/kg NAR offers are around $95/mt FOB,” said a trader in China, Friday.
Prompt-delivery Newcastle 5,500 kcal/kg NAR thermal coal was trading at around $100/mt FOB in the week ended October 21.
In a thinly traded market, Chinese buyers were heard bidding for Newcastle low calorific value thermal coal at $108/mt against offers at $110/mt CFR China, market sources said.
“This week is dead still, stockpiles are high in both Qinhuangdao port and at power plants,” said the Chinese trader.
“A lot of cargo is being dumped [into the market], but the Chinese side is not interested in taking it,” the trader added.
Newcastle 5,500 kcal/kg NAR thermal coal is primarily sold to the Chinese and South Korean markets, while Newcastle 6,000 kcal/kg NAR product is favored by Japanese buyers.
“China has high stocks, but they will take coal if they can and if the price is right,” said a trader.
Sales of Newcastle 5,500 kcal/kg thermal coal have fallen sharply from a few weeks ago when sales volumes were higher, he added.
End-users in China were finding it increasingly difficult to obtain credit to finance cargo purchases, as has been the case for the past three or five weeks, said market sources.
Tighter credit conditions were affecting the purchasing power of some Chinese coal buyers.
“It is a risk management issue for the seller,” said one Asia-Pacific market participant.
“But it all depends on who you have as a Chinese counterparty. A good counterparty will have no credit issues,” he said.
Another market participant commented: “Some utilities in China are having large cash-flow problems and are asking suppliers to wait for payment.”
He believed the current bearish market conditions for China would last for some time.
“I think it will be around for a while and I think Q1 2012 will be worse. We are now in a declining market,” he added.
For 6,000 kcal/kg NAR thermal coal on-screen prices have buckled too, and during the Asian trading window Friday, February loading parcels were bid at $108/mt FOB versus offers at $111-$111.50/mt FOB Newcastle on globalCOAL.
The slide in Newcastle 6,000 kcal/kg NAR spot prices started in earnest in late October when they plunged through the $120/mt FOB level, and went on down past $115/mt FOB in early November.
Source: Michael Cooper, Platts
Sellers were hastily rethinking their price offers for 5,500 kcal/kg net as-received cargoes for delivery in the next 7-45 days, as buyers in China wound back their bids to between $90-$95/mt FOB Newcastle in the week ended November 25.
“5,500 kcal/kg NAR from Australia has flopped. The market is now bid at $90-$95/mt FOB Newcastle,” said one Asia-Pacific market participant.
“China has been buying ahead of the curve and they are now looking for March-delivery cargoes, and not so much for January and February,” he added. Offers weakened to $95/mt FOB Newcastle, down $1-$2/mt from $96-$97/mt FOB on November 18, said market sources.
“For Australian 5,500 kcal/kg NAR offers are around $95/mt FOB,” said a trader in China, Friday.
Prompt-delivery Newcastle 5,500 kcal/kg NAR thermal coal was trading at around $100/mt FOB in the week ended October 21.
In a thinly traded market, Chinese buyers were heard bidding for Newcastle low calorific value thermal coal at $108/mt against offers at $110/mt CFR China, market sources said.
“This week is dead still, stockpiles are high in both Qinhuangdao port and at power plants,” said the Chinese trader.
“A lot of cargo is being dumped [into the market], but the Chinese side is not interested in taking it,” the trader added.
Newcastle 5,500 kcal/kg NAR thermal coal is primarily sold to the Chinese and South Korean markets, while Newcastle 6,000 kcal/kg NAR product is favored by Japanese buyers.
“China has high stocks, but they will take coal if they can and if the price is right,” said a trader.
Sales of Newcastle 5,500 kcal/kg thermal coal have fallen sharply from a few weeks ago when sales volumes were higher, he added.
End-users in China were finding it increasingly difficult to obtain credit to finance cargo purchases, as has been the case for the past three or five weeks, said market sources.
Tighter credit conditions were affecting the purchasing power of some Chinese coal buyers.
“It is a risk management issue for the seller,” said one Asia-Pacific market participant.
“But it all depends on who you have as a Chinese counterparty. A good counterparty will have no credit issues,” he said.
Another market participant commented: “Some utilities in China are having large cash-flow problems and are asking suppliers to wait for payment.”
He believed the current bearish market conditions for China would last for some time.
“I think it will be around for a while and I think Q1 2012 will be worse. We are now in a declining market,” he added.
For 6,000 kcal/kg NAR thermal coal on-screen prices have buckled too, and during the Asian trading window Friday, February loading parcels were bid at $108/mt FOB versus offers at $111-$111.50/mt FOB Newcastle on globalCOAL.
The slide in Newcastle 6,000 kcal/kg NAR spot prices started in earnest in late October when they plunged through the $120/mt FOB level, and went on down past $115/mt FOB in early November.
Source: Michael Cooper, Platts