Lack of rail quotas continues to hamper spot coal supply at N China ports
A lack of rail transport capacity continued to hinder traders from moving thermal coal to northern China ports, supporting spot prices to stay high for the moment.
"It has become increasingly hard for us to obtain rail quota," said a Shanxi-based trader. "It's a common practice that many local railway bureaus choose to reduce or suspend coal delivery after achieving annual target."
After slight drop of mine-mouth prices, traders now can earn decent profit by shipping coal from production bases to northern ports, according to the trader.
Hohhot Railway Bureau in the northern autonomous region of Inner Mongolia has reduced coal transport to ensure safety before the end of the year, one local trader said.
One large utility is buying mid-December loading 5,500 Kcal/kg NAR coal at 690 yuan/t FOB with VAT, an acceptable level to traders, the trader noted.
Not so many spot cargoes were available at norther ports, said another Inner Mongolia-based trader, attributing this to tight rail capacity.
Most inquiries were targeting 5,000 Kcal/kg NAR coal, which was offered at 620 yuan/t FOB, the trader pointed out. He added 5,500 Kcal/kg NAR coal, offered at 695 yuan/t, could be talked down to 687 yuan/t.
At old Jingtang port, there were coal stocks totaling 1.5 million tonnes, 1.1 million tonnes of which belonged to large coal groups while the remaining are traded in the spot market, said a Zhejiang-based trader.
There were traders offering 5,800 Kcal/kg and single-mine 0.8% sulfur Shanxi 5,000 Kcal/kg NAR coal at 736 yuan/t and 630 yuan/t, with no room for price negotiation, he added.
Mainstream offer price for 5,500 Kcal/kg NAR coal was 695 yuan/t FOB and some even higher at 700 yuan/t, according to one Qinhuangdao-based trader.
Tightly supplied 5,000 Kcal/kg NAR coal was offered at 617-620 yuan/t and some trades were heard stricken at 615 yuan/t, the trader said, adding the price may further inch higher.
"One of my friends offered Inner Mongolia 5,000 Kcal/kg NAR coal at 618 yuan/t, and some other traders are offering the material at 620 yuan/t, but no deals were heard concluded yet, said a Tianjin-based trader, who predicted more upside room in the near term.
Compared with prevailing upbeat mood, one Hebei-based trader was sort of cautious, saying prices may stabilize later as downstream buying seems not so active.
On December 4, the Fenwei CCI Thermal index for domestic 5,500 Kcal/kg NAR coal traded at Qinhuangdao port was assessed at 691 yuan/t FOB with 17% VAT, rising 2 yuan/t day on day and up 12 yuan/t week on week.
The Fenwei CCI Thermal index showed domestic 5,000 Kcal/kg NAR coal increased 5 yuan/t from a day ago to 615 yuan/t FOB with VAT on the same day, which was up 18 yuan/t from the week-ago level.
Sources: Fenwei Energy
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