Indonesian ICI 4 coal futures trade ticks up

: Coal
18/10/17

Some 50,000t of ICI 4 derivatives contracts for Indonesian low-calorific value (CV) coal cleared on the CME today, with open interest increasing slightly from last week.

A block of 20,000t traded at $38.75/t, while two tranches of 10,000t and 20,000t each sold later in the Asia-Pacific trading day at $38.85/t. The contracts were for November and brokered by Singapore-based Evolution.

By comparison, November ICI 4 derivatives contracts traded last month at the higher price of $40.15-40.35/t. October ICI 4 contracts were bid today at $38.25/t and offered at $38.75/t, reflecting a similar softening in the physical coal market over that period.

Open interest in the ICI 4 derivatives market, which clears on the CME, increased slightly and was at 190,000t as of late on 15 October, up from 175,000t last week.

Today's futures trades mean 105,000t of ICI 4 derivatives contracts have been cleared so far this month, taking the total traded volume since the contract launched in February to 1.37mn t, after 260,000t sold in September.

Cautious physical demand

In the physical market, Indonesian low-CV coal prices appeared to be holding steady during the course of this week as trades for November-loading GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) began to emerge at similar prices to deals last week.

A November-loading geared Supramax cargo of GAR 4,200 kcal/kg coal traded yesterday at $38.20/t, with another trade involving the same type of coal emerging today at the slightly lower price of $38/t. By comparison, a cross-month late October-early November geared Supramax cargo traded late last week, also at $38/t. And yesterday, geared Supramaxes of November-loading GAR 4,200 kcal/kg coal were offered at $38.50/t and $39.25/t, with one bid at $38/t. A larger gearless Panamax cargo of the same coal, which is not captured in the Argus index, was being offered at $40/t today, although potential buyers were refusing to raise their bids above $39/t.

While there are some enquiries from Chinese buyers, spot demand from the key Chinese and Indian markets remains tepid.

Elsewhere in the Indonesian market, trade was muted, although a deal involving a November-loading geared Supramax cargo of GAR 3,400 kcal/kg (NAR 3,000) coal was close to being finalised at $23.50/t, lower than a similar trade last week at $23.75/t.

In the Australian market, fob Newcastle NAR 6,000 kcal/kg prices could be starting to stabilise after a December-loading 80,000t consignment traded on screen today at $106.15/t. By comparison, a 50,000t November-loading cargo traded on screen late last week at $104.50/t, after several 25,000t November-loading cargoes traded at $112.45/t, $112/t, $111 and $107.25/t. All the 25,000t cargoes fell below the 50,000t minimum for inclusion in the Argus index.

In the Australian high-ash market, a Capesize cargo of NAR 5,500 kcal/kg coal was being offered at $65/t, with the highest bid at around $64/t. But the cargo is destination-restricted to China.

In the domestic Chinese market, stronger restocking needs continued to support domestic prices, with offers of NAR 5,500 kcal/kg coal at Yn675-680/t fob northern China ports today. A 50,000t cargo of NAR 5,500 kcal/kg coal traded at around Yn670/t earlier this week. Both offers and bids suggest a rise from Argus' last assessment of Yn661.08 ($95.42/t) fob Qinhuangdao, on 12 October. The Zhengzhou Commodity Exchange's January contract closed at Yn664.4/t today, up by Yn2.20/t on yesterday.

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