Heavy rain and rough seas in several parts of Indonesia, including the main Kalimantan coal-producing region, have resulted in a large build-up of vessels waiting to load coal cargoes. This is curbing supplies and offering support to prices.
The vessel queue at the major coal-loading port of Samarinda in east Kalimantan is particularly badly affected, where large sea swells are disrupting the transshipment of cargoes from barges to vessels. Other regions, including Sumatra, are also being affected. The number of vessels waiting to load coal cargoes at Indonesian ports has risen to around 204-207 as of today, up from around 187 a week ago, according to one market participant familiar with the situation. Under normal circumstances there are usually around 130-134 vessels waiting to load coal cargoes at Indonesian ports.
The disruptions are curbing supplies which, along with firm demand from key buyers China and India, has been a contributing factor behind a increase in Indonesian prices.
The Indonesian physical market made a typically slow start to the week today, with details of bids and offers scarce, although prices were holding steady at similar levels to late last week.
An Indonesian producer was offering a mid-March loading geared supramax GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) cargo at $38/t today. Bids were scarce, although there are expectations that most buyers will most likely start bidding as this week progresses at around $37-37.25/t, which is little changed from late last week.
Fob prices of Indonesian GAR 4,200 kcal/kg coal rose by $1.78/t to $37.11/t last week, the highest since late October. The prices secured in GAR 4,200 kcal/kg trades increased as last week progressed, although prompter March cargoes attracted a premium to April shipments. March-loading geared supramax shipments traded at $37.50-38.00/t, while some April-loading shipments traded lower at $36-36.50/t.
The ICI 4 derivatives market also made a slow start to the week. March 5,000t contracts were bid at $39/t and offered at $39.85-39.95/t today with Singapore-based brokers. April 5,000t contracts were bid at $37.50-38.50/t and offered at $39.40-39.50/t.
A total of 65,000t of ICI 4 derivatives were cleared on the CME last week. Of this total, a 10,000t March ICI 4 contract traded on 19 March at $37.75/t, with another 15,000t for March selling on 20 February at $38.55/t and a further 5,000t trading later that day at $39/t. Two 5,000t March contracts traded on 22 February at $39.50/t, while 25,000t of April contracts sold for $38.50/t.
Around 110,000t of ICI 4 derivatives have traded so far this month, taking the total cleared on the CME since the contract launched in February last year to just under 2.1mn t.
The Australian market saw a 50,000t March-loading cargo of NAR 5,500 kcal/kg high-ash coal offered on screen for $60/t fob Newcastle but no trades emerged. The market was assessed at $60.06/t fob on 22 February and traded for $60/t and $60.50/t last week, suggesting that prices have already started to trend lower this week.
The latest in a string of logistical disruptions in Australia's Queensland saw choppy seas halt loadings at the Dalrymple Bay Coal Terminal (DBCT) and Hay Point loadings in Queensland until tomorrow. The Abbot Point coal terminal in north Queensland was previously closed for more than two weeks because of heavy rain and flooding, with it reopening on 15 February.
Tropical Cyclone Oma has lost strength and is now a tropical low, but it has still brought strong winds and sea swells off the Queensland coast of Mackay, forcing port operators at Hay Point and DBCT to clear berths and halt vessel loadings until sea conditions ease. Vessel loading operations at both ports are expected to restart tomorrow morning, port agents said.
A fatal mine accident that killed 21 workers on 23 February has boosted Chinese futures prices, with the most actively traded May contract closing at 590.80 yuan/t today, up by Yn7.80/t from 22 February.
Prices at north China ports have not responded immediately to the accident, with offers of NAR 5,500 kcal/kg at around Yn600-605/t fob north China port today. Utilities bid the coal at around Yn595/t. The offers and bids indicated a steady market from Argus' last assessments of Yn600/t ($89.05/t) fob Qinhuangdao on 22 February.
Source: Argus Media
25 February 2019