February 8, 2019 / 3:42 AM / 3 months ago

Australian thermal coal prices fall to lowest since April 2018 on weak China demand

SINGAPORE (Reuters) - Australian thermal coal prices have fallen to their lowest since April 2018 as a slowdown in Chinese imports dents demand for the commodity.

FILE PHOTO: A ship waiting to be filled with a load of coal can be seen behind a surfer riding a wave at Merewether Beach in Newcastle, located north of Sydney in Australia, August 14, 2018./File Photo

Spot cargo prices for Australian thermal coal exports from the port of Newcastle were last settled at $95.75 per ton, the lowest since a spike in April 2018 pushed prices above $100 a ton.

The 6 percent slump since the start of the year is a result of a sharp slowdown in Chinese imports of coal.

Refinitiv ship tracking data on Friday showed dozens of large dry-bulk carriers sitting outside China’s major coal import terminals, waiting to unload.

(Australian Newcastle coal price: tmsnrt.rs/2Bqjibs)

(Australia coal exports vs China coal imports: tmsnrt.rs/2tbt9xa)

(China coal congestion: tmsnrt.rs/2BsnFCG)

“As far as we know, Australian metallurgical and thermal coal vessels still cannot clear customs in China, and there have been reports of customs officers telling customers that the blockage will continue at least until the end of February,” said a senior analyst with a coal merchant in Singapore.

He declined to be named due to company policy.

China has been celebrating the start of the Lunar New Year this week, resulting in an almost complete shutdown of official business.

However, customs had already been slow to clear imports in the weeks running up to the holiday, with no official reasons given.

Trade data in Refinitiv showed Chinese coal imports to have dropped from 4.67 million tons in week four of 2019 to 3.57 million tons a week later. Australian coal exports dropped from 8.36 million tons to 7.46 million tons during that time.

High inventories could be part of the import slowdown.

“Total (coal) stocks at the main Bohai sea ports of Caofeidian, Qinhuangdao and Jingtang in Northern China totaled 16.01 million tons as of Feb. 2, 2019, over 5 million tons higher year-on-year,” said Vishal Thiruvedula, Refinitiv coal analyst, in a report published this week.

Beyond the this, the upcoming end of the peak winter heating seasons would also dent coal demand, two traders said.

“Temperatures will moderate across the Northeast (of China) in the 6 to 10 day time frame, while North China remains mild,” said Refinitiv weather analyst Ed Whalen.

For Japan and South Korea, the region’s other main coal importers, “the temperature pattern is fairly similar ... (with) slightly warmer than normal” conditions, which imply relatively low thermal coal demand toward the end of winter.

Reporting by Henning Gloystein; editing by Christian Schmollinger

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