Near-term seaborne thermal coal market in limbo as China plays its cards

Uncertainty looms in the seaborne thermal coal market as suppliers await for any positive indications from China on loosening its policy on imports during the seasonally strong fourth-quarter. Thermal coal suppliers are a worried lot, especially as there are no other alternative markets which can potentially absorb the excess tonnages. Seaborne thermal coal prices have been holding strong since the second-half of 2016 mainly due to policy changes in China. Earlier in 2016, China tried to shore up its own ailing domestic market, but things quickly spiraled out of control when Chinese domestic thermal coal prices more than doubled, and end-users began to bear the brunt of high prices. China has since introduced fresh policies aiming to cool domestic prices, but looks like that has not met with enough success. The price of Chinese 5,500 kcal/kg NAR, which was at Yuan 365/mt FOB Qinhuangdao in January 2016, was assessed by S&P Global Platts on Monday at Yuan 668/mt, well above the Yuan 500-570/mt range Chinese authorities want to maintain. And even if Chinese utilities want to tap the seaborne market for cheaper cargoes during the winter restocking period, they are deterred by the so-called import quota system in place. The… continue reading

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Source: CTRM Center

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