Asia-Pacific benchmark Newcastle prices were little changed on the week amid tepid Chinese demand, although some rise in Indian buying interest underpinned the market, participants said on Thursday.
Broker Global Coal’s benchmark Newcastle (Australia) index was assessed last at USD 108.49/t, up by a marginal 1.7% on the week.
But China’s Zhengzhou front-month thermal coal futures contract settled last 3% lower on the week at CNY 643.80/t (USD 92.72/t).
“[Chinese utility] demand is quite disappointing, which is the main factor dragging down prompt spot and futures prices,” said a coal analyst with an energy trading firm, adding there was a seasonal weakness in demand between the summer cooling and winter heating periods.
“Thus, the current price reflects this,” she said, adding there was a “chance for a price rebound” in the fourth quarter, once the heating season begins and hydropower output declines.
An analyst with a coal supplier, meanwhile, said Chinese buyers were keen to make purchases, at current prices but they were constrained by annual import quotas, for which many have already reached their limits.
“But this should end by mid-November, when they can buy cargoes that will arrive in January,” he said, adding “import quotas then will start from zero and Chinese [traders] will be able to import without this constraint”.
Meanwhile, Indian stocks continued to diminish, raising the prospect of some step-up in import demand over the coming weeks, participants said.
Inventories at 123 Indian coal-fired plants monitored by the country’s Central Electricity Authority declined by 7% on the week to a fresh 11-month low of just 9.5m tonnes.
“Demand is increasing from India,” said an Indian coal trader, adding state-owned producer Coal India was unable to provide sufficient supply to meet generation requirements.
“Some companies are [therefore] looking for imported coal,” he added.