(Montel) The Asia-Pacific benchmark Newcastle index has risen to its highest level in more than a fortnight amid ongoing threats to near-term supply and despite relatively weak demand from China, participants said on Thursday.
The Global Coal Newcastle index rose 2.5% over the past week to USD 96.94/t – its highest level since 19 September.
Australia, the world’s number-two thermal coal supplier, continues to face strike action at a number of Glencore-owned mines, and workers at one of the country’s largest coal haulage firms have also threatened industrial action.
“I think it’s just tightness, with some talk about labour action at the [Australian] rail carriers,” said a Singapore-based coal broker.
Yet China’s Zhengzhou January 2018 thermal coal futures contract – with often moves in line with Newcastle prices – last settled at CNY 625.60/t (USD 94/t), down 2% from a week ago.
“With the mid-Autumn festival holiday in full swing in parts of Asia, the [Australian and Indonesian physical] markets were both quieter,” said a broker in a note to clients, in regard to China’s Golden Week holiday, which began on Monday.
Other buyers
Participants pointed to increased demand from other consuming countries ahead of the winter heating season.
“Restocking demand remains strong from all major buyers, especially from Indian power plants, which are dealing with critical inventory levels,” said Diana Bacila, senior analyst at Oslo-based Nena.
Stocks at 112 of India’s power stations have fallen to 8.2m tonnes, down 8% week on week and the lowest level since late October 2014. This is sufficient for just six days’ generation.
Coal India, a state-owned firm, produced 38.8m tonnes of coal last month, up by around 10% on the year, the company said this week.
It was the firm’s eleventh consecutive monthly rise in production, and offered some indication that the country may, at least in part, keep replenishing stocks and keep plants running on prompt deliveries from mines.
Furthermore, coal handled by Indian ports last month fell 14% on the year to 9.3m tonnes, signalling lower demand for seaborne supplies, government data showed.
Price indicators (week on week change):
Global Coal Newcastle index – USD 96.94/t (USD 2.35)
Global Coal Richards Bay index – USD 91.13/t (USD -0.13)
Zhengzhou (ZC) thermal coal futures, January contract – CNY 625.40/t (CNY -12.6)
Stocks and Queues:
PWCS Newcastle (Australia) stocks – 1.32m tonnes (0.06m tonnes)
PWCS vessel queue – 2 vessels (-5 vessels)
Port Kembla Coal Terminal (Australia) stocks – 0.2m tonnes (0.04m tonnes)
Kembla vessel queue – 0 vessels (unchanged)
Indian power plant stocks – 8.2m tonnes (-0.71m tonnes)
Reporting by:
Laurence Walker
laurence@montel.no
08:40, Thursday, 5 October 2017