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Chinese thermal coal miners' price cuts hit import demand

Updated: 2014-06-03 08:30

    Large Chinese thermal coal miners were dropping their selling prices for domestic 5,500 kcal/kg NAR coal, depressing demand for imported material, sources said Friday.
    An Indonesia-based trader said that Shenhua had cut its price for 5,500 kcal/kg NAR coal by Yuan 5 ($0.81) to Yuan 530/mt, citing his talks with his Chinese counterparts on Friday.
    Shenhua cut prices for 5,200, 5,500 and 5,800 kcal/kg NAR coal by Yuan 5/mt, a Singapore-based trader said, adding that for June, however, the miner has raised prices for 4,500, 4,800 and 5,000 kcal/kg NAR coal by Yuan 5/mt.
    Following the announcement of China National Coal Group's price cut of Yuan 5/mt from Thursday onward for its major thermal coal products, transactable prices of China's domestic 5,500 kcal/kg NAR coal are now Yuan 520-525/mt, or Yuan 444-449/mt excluding value-added tax, FOB Qinhuangdao Port.
    "Although there are still some people expecting an upturn toward mid-July, we would no longer make any purchases for July or August," a Shandong-based trader said.
    High coal stocks at both Chinese power plants and sea ports have deterred many Chinese traders from making purchases, sources said.
    A number of Chinese trader are now in a panic-selling mode for their late-June and July delivered cargoes of 5,500 kcal/kg NAR Australian coal at about $72/mt CFR southern China, sources said.
    Bids, however, have now dropped to about $70.50/mt CFR, a Liaoning-based trader said.
    At the close of Asian trade Friday, the Platts/Fenwei China Coal Index (CCI 1) for domestic thermal coal traded at Qinhuangdao port was assessed at Yuan 523/mt including VAT, unchanged from Thursday.
    The CFR South China (CCI 8) price was assessed at $72.20/mt basis 5,500 kcal/kg NAR, excluding Chinese VAT, stable on the day.
    A Capesize cargo of Australian 5,500 kcal/kg NAR coal was being offered at $71.90/mt CFR south China for June arrival, as heard through broker Marex Spectron.
    "Stocks at utilities are very high and they are not buying much," a second Shandong-based trader said, referring to the muted demand in China.
    A Capesize cargo of 5,500 kcal/kg NAR Australian coal was offered at $61.50/mt FOB for July delivery, he said. With estimated Capesize freight rate of $12/mt from Australia to south China, this offer translates to $73.50/mt CFR while buying interest from Chinese traders is at about $72/mt CFR.
    A third Shandong-based trader said that he had heard of a "rumor" that there were several distressed cargoes -- amounting to as much as 400,000 mt of Australian coal -- expected to flood Chinese ports early next month.
    "I would be not surprised if it's true. Demand from Chinese utilities is too bad," he added.
    A July loading Capesize cargo of Australian 5,500 kcal/kg NAR coal was reportedly sold to an Indian buyer at $64.50-65,00/mt FOB, an India-based trader said.

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