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Indonesian ICI 4 coal trade; interest up on last week

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World Coal,

According to Argus Media, on 17 October, some 50 000 t of ICI 4 derivatives contracts for Indonesian low-calorific value (CV) coal cleared on the CME, with open interest increasing slightly from last week.

A block of 20 000 t traded at US$38.75/t, while two tranches of 10 000 t and 20 000 t each sold later in the Asia-Pacific trading day at US$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 US$40.15 - 40.35/t. October ICI 4 contracts were bid on 17 October 2018 at US$38.25/t and offered at US$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 190 000 t as of late on 15 October, up from 175 000 t last week. 

The futures trades from 17 October 2018 mean 105 000 t of ICI 4 derivatives contracts have been cleared so far this month, taking the total traded volume since the contract launched in February to 1.37 million t, after 260 000 t 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 4200 kcal/kg (NAR 3800 kcal/kg) began to emerge at similar prices to deals last week.

A November-loading geared supramax cargo of GAR 4200 kcal/kg coal traded on 16 October 2018 at US$38.20/t, with another trade involving the same type of coal emerging today at the slightly lower price of US$38/t. By comparison, a cross-month late October-early November geared supramax cargo traded late last week, also at US$38/t. And on 16 October 2018, geared supramaxes of November-loading GAR 4200 kcal/kg coal were offered at US$38.50/t and US$39.25/t, with one bid at US$38/t. A larger gearless panamax cargo of the same coal, which is not captured in the Argus index, was being offered at US$40/t on 17 October 2018, although potential buyers were refusing to raise their bids above US$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 3400 kcal/kg (NAR 3000) coal was close to being finalised at US$23.50/t, lower than a similar trade last week at US$23.75/t.

In the Australian market, fob Newcastle NAR 6000 kcal/kg prices could be starting to stabilise after a December loading 80 000 t consignment traded on screen on 17 October 2018 at US$106.15/t. By comparison, a 50 000 t November-loading cargo traded on screen late last week at US$104.50/t, after several 25 000 t November-loading cargoes traded at US$112.45/t, US$112/t, US$111 and US$107.25/t. All the 25 000 t cargoes fell below the 50 000 t minimum for inclusion in the Argus index.

In the Australian high-ash market, a capesize cargo of NAR 5500 kcal/kg coal was being offered at US$65/t, with the highest bid at around US$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 5500 kcal/kg coal at Yn675-680/t fob northern China ports today. A 50 000 t cargo of NAR 5500 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 (US$95.42/t) fob Qinhuangdao, on 12 October. The Zhengzhou Commodity Exchange's January contract closed at Yn664.4/t on Wednesday, up by Yn2.20/t on Tuesday this week.

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