Chinese coal conference fails to boost liquidity
Chinese coal demand failed to pick up in week 16, despite an industry conference in Beijing in the first half of the week that was expected to bring more liquidity into the market, sources said.
Demand for benchmark SCoTA-specific (Standard Trading Coal Agreement) coal has been low since the start of the year, with cheap US and Colombian coals undercutting the prices of traditional suppliers into Asia, such as South Africa, Indonesia and Australia.
Market participants last week expected the conference in Beijing would help establish more market consensus and increase activity, but sources told ICIS hardly any deals were done as the general mood of the conference was pessimistic.
Most prices remain too high to spark buying interest, one London-based source said, with China mainly interested in picking up "bargains".
A Chinese source confirmed most deals into China are traded bilaterally, for non-SCoTA coal and with no reference to price indices or benchmarks.
According to the source, China bought more than 100m tonnes of off-spec coal last year and only about 2m tonnes of on-spec, SCoTA qualifying coal.
At the moment, China is mainly interested in 3,300kCal/kg and 6,300kCal/kg Indonesian coal and Australian coal of 4,700-6,000kCal/kg, although prices of these coals are still too high to tempt buyers, a Chinese source said.
He added Australian 5,500kCal/kg coal is currently offered into China at $103-104/tonne CFR (cost and freight). South African 6,000kCal/kg coal is offered at $117.00/tonne CFR, while Indonesian 4,700kCal/kg coal is offered at $77.00/tonne FOB (free on board).
A source with an Indonesian producer said Indian buyers are willing to pay more than Chinese buyers. In addition, prices Chinese buyers are willing to accept are too low to make economic sense to Indonesian producers, particularly after the increase in local prices. MV
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