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Indonesia coal: Prices up while ICI 4 trade surges

Fob Indonesia prices rose again this week, supported by tight availability amid weather issues in Kalimantan and Sumatra and strong Chinese demand.

The situation is being exacerbated by a government-imposed reduction in output at smaller mining firms that did not fulfill their 2018 domestic market obligations, while a large Indonesian producer has had to declare force majeure on its shipments, market participants said.

Activity also surged in the ICI 4 derivatives market this week, with 168,000t clearing on the CME today — the highest single daily volume since the contract launched in February last year.

Indonesian producer Bayan Resources has had to declare force majeure on shipments because of low river levels, which have impacted its ability to barge coal from mines to waiting vessels, market participants said. The firm said previously that it aims to produce 32mn-36mn t of coal this year, up from 31mn t in 2018. It is unclear how long the problem will last, although the monsoon season in Kalimantan has already begun, which typically raises water levels in rivers that are used to transport coal by barge.

Fob prices of the actively traded GAR 4,200 kcal/kg coal increased the most out of the Indonesian grades, rising by $2.16/t to $40.50/t — the highest since early August 2018. The prices at which deals were concluded and cargoes offered increased as the week progressed. A March-loading geared supramax cargo of this coal was offered at the start of the week at $39/t, but offers had risen to as high as $43/t by today for an April-loading shipment. Deals involving April-loading geared supramax cargoes were concluded in a $40.50-42/t range. By comparison, March-loading geared supramax shipments changed hands last week at $38-38.50/t.

Demand for low calorific value (CV) product has also increased as prices of other grades have risen. A cross-month late March/early April loading supramax cargo of GAR 3,400 kcal/kg (NAR 3,000 kcal/kg) coal traded at $22.75/t this week. A March-loading cargo of the same coal changed hands at the same price, although this fell outside the current April and May assessment window. Fob GAR 3,400 kcal/kg prices increased by 63¢/t to $22.74/t.

Participants are monitoring an Indian ruling that could potentially remove around 3-5mn t/yr of demand for mostly mid-CV coal from the market, despite the generally bullish mood in the market. India's National Green Tribunal has ruled against ceramic makers using coal in their gasifiers in the Gujarat area, where they are clustered, and use LNG or LPG instead. The ruling has not yet had any impact on prices but has curtailed trading activity in the mid-CV GAR 5,000 kcal/kg (NAR 4,600 kcal/kg) market, participants said.

Fob Indonesia GAR 5,000 kcal/kg prices increased by 55¢/t to $57.39/t over the week, but cfr east coast India prices of the same coal were unchanged at $65.96/t. Delivered prices of NAR 5,500 kcal/kg coal declined by $2.06/t to $72.44/t, while GAR 4,200 kcal/kg prices were assessed $1.03/t higher at $48.89/t.

ICI 4 futures trade further out

Activity increased sharply in the ICI 4 thermal coal derivatives market, with a total of 365,000t of mostly third and fourth-quarter 2019 contracts changing hands this month. This week's volume also broke the previous monthly record of 265,000t in October 2018.

The latest trades take the total volume cleared on the CME since the contract launched last year to just under 2.5mn t.

All of today's trades, totalling 168,000t, changed hands for the third and fourth quarters of 2019 at $39-40.25/t in strips of 4,000-9,000t and were brokered by Singapore-based Evolution Markets. The trades were concluded at higher prices than similar trades earlier this week, when a total of 72,000t traded for the third and fourth quarters of 2019 in strips of 5,000-7,000t at $38.10/t. This was the third time this week that trades cleared all the way out to the end of the year since the launch of the contract.

News No: 3909
Date: 2019/03/08 - 20:04
News Source: Argus Media

Indonesia coal  Fob  Kalimantan  Sumatra  CV 

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