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Bearish Factors Were Offsetting Any Positive Sentiment on Indian Demand

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Core Tip: Bearish factors weighing on the Chinese market were offsetting any positive sentiment on Indian demand for Indonesian thermal

Bearish factors weighing on the Chinese market were offsetting any positive sentiment on Indian demand for Indonesian thermal coal, sources said Thursday.

A Singapore-based source for a major producer said he did not share in the bullish sentiment on Indian demand improving near term because of the Indian government's commitment to develop its power sector.

"These are just sentiments," he said. Meanwhile, problems in China are real, he said, referring to the oversupply weighing on the market as well as banks' lending restrictions and Shenhua's, China's largest coal producer, cuts in domestic prices.

"This [bearishness] can be sustained for a longer period," he added.

An Indonesia-based trader said many market players were waiting for the Indian government to develop a policy on its power sector, which may take some time.

But he said many traders were hopeful for a boost in Indian demand in the near term, as the market had been in the doldrums for a long time now.

"Blackouts in India last for four to five hours," he said, emphasizing the rationale behind the government's strong interest to improve infrastructure for electricity generation and distribution. "So, this is favorable to imported coal demand," he added.

He said offer prices seen for 3,800 kcal/kg GAR were at $31.50-32/mt FOB and some trades were heard within the range of $31-31.75/mt FOB for June-loading Supramax cargoes.

He added that offers for 4,200 kcal/kg GAR were at $37.50/mt FOB, but deals were being concluded in India at $37/mt FOB.

He also said he heard a Chinese buyer defaulted on a Supramax cargo of 4,200 kcal/kg GAR priced at $37.50/mt, and it was eventually sold to India at $37/mt FOB.

A Singapore-based source for a Chinese trading company said it had received an offer for a Q3-loading Supramax cargo of 3,800 kcal/kg NAR at $37.50, but its bid was at $37/mt FOB.

He added that a Supramax parcel of 4,700 kcal/kg NAR, also for Q3 loading, was offered at $56-56.50/mt FOB. "But our buying interest is at $55/mt FOB or less," he said.

He said Indonesian 5,500 kcal/kg NAR coal was being offered to China at $71/mt FOB.

A China-based source said a late-June loading gearless Panamax cargo of 4,800 kcal/kg NAR Indonesian coal was offered at $53.50/mt FOB or some $61.50/mt CFR, only to meet Chinese bids of about $51-52/mt FOB.

An Indonesian producer said it preferred to sell to Taiwan, Malaysia and Japan because buying interest from China and India was "too low."

He said it sold a Panamax cargo of 6,400 kcal/kg GAR to Taiwan last month at $82/mt FOB, and was currently negotiating a deal with an Indian buyer via an Indian trader for another Panamax cargo of this grade for June/July loading offered at $80/mt FOB.

He said it also sold a Panamax cargo of 5,500 kcal/kg GAR to Taiwan last month at $69.20/mt FOB. For a June-loading Panamax cargo of this grade, he said its offer price to Taiwan was $69/mt FOB.

Platts assessed the price of FOB Kalimantan 4,200 kcal/kg GAR coal at $37.30/mt, down 10 cents on the day, and FOB Kalimantan 3,800 kcal/kg GAR at $31.30/mt, unchanged from Wednesday.

Platts also assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $55.20/mt and FOB Kalimantan 5,900 kcal/kg GAR coal at $66.80/mt, both unchanged from Wednesday.

 
 
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