GINGA WEEKLY STEAM COAL REPORT (Date : 1 April 2005) PHYSICAL FUNDAMENTAL
(figures in this table include firm and indicative bids and offers collected from our daily talks and transactions, for more details please kindly contact us) Market is clearly getting into toning down phase. The contract is offered at below $52.00 along the curve (although higher offers were posted on GlobalCoal screen). The weakening is expectable as we enter Q2, the period that is always deemed to be lowest season of the year. Last week support of 51.00 can not be counted on any more. Market may put up a little struggle before it falls below this 51.00 again.
According to a China-based source a Panamax cargo was sold to Korean user at $59.00/mt FOB (C.V 6,080 NAR , ash 10-11%). The price is lower than previously done (used to be above $60). Chinese domestic market is showing more balanced, less tight comparing to early this year. There is speculation that Chinese suppliers will settle LT contract at around $57.00 (C.V 5,800 NAR) with Japanese buyers. It is also forecasted that this year LT quantity might be lower than last year.
CFR Korea is valued at around $61.00-63.00/mt. In the most recent spot tender by one major genco Indonesian material is heard offered at around $46-48 (adjusted to C.V 6,080 NAR equivalent). Panamax freight for gearless from Indonesia to Korea is generally at $14.00/mt. There is argument that the adjusted price does not make sense as Indonesian low C.V coal is priced at great discount to higher C.V coal (as low C.V coal is much more abundant and a lot of small, medium producers are willing to play the dumping games to get business done). Whatever the argument is, the bottom line is that Korean gencos would not buy if their landed cost is not at low 60s. CFR Japan is valued at US$1.50 premium to CFR Korea mainly due to specs difference. Japanese buyers usually take 13% Ash coal while Korean buyers can take 15% Ash. From today new coal import tax of JY 460/mt is applied in Japan (the old tax rate was JY 230/mt). Japanese end users are said to have stocked up inventory well before this came into effect. Their inventory tells us to forget spot business with Japanese buyers for the time being.
API 4 curve : Q2-05 47.50 / Q3-05 49.30 / Q4-05 53.25 / Cal 06 53.65. API 2 curve : Q2-05 67.00 / Q3-05 67.00 / Q4-05 70.50 / Cal 06 69.00 Europe dark spread is said to be so high that some utilities are attracted to lock in margin by selling power and buying back coal especially for Q4-05 and Q1-06 period. As the result the back end of the curve is kept stronger than the front. COAL DERIVATIVES
(figures in this table include firm and indicative bids and offers collected from our daily talks and transactions, for more details please kindly contact us) There was flurry of activities on Newc swap last few days amid major traders hedging. There is strong belief that these swaps were connected to physical trading. Market lost at least 0.75 in two days with aggressive selling. As with forward physical contract, we can expect swap to fall below 51.00. CRUDE OIL MARKET ( Singapore business close today) WTI crude is trying to move up, next barrier 56.10. WTI crude : May 55.70/ June 56.61/July 57.16/Aug 57.31 Brent crude: May 54.80/June 55.50/July 55.81 |
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