SGX M42F Thermal Coal - Daily Update 17 July 2020

July month-to date:

Futures volume at 183kt, Open interest at 348kt

 

Total volume since January 2020: 1,918kt

 

Physical

Supply tightness caused by a slowdown in production in several rain-hit parts of Kalimantan has supported Indonesian coal prices slightly over the week. Several buyers said that supplies were limited, particularly from mines in South Kalimantan. "The weather forecast indicates that the peak of this rainy period is in mid-July. As of now our production rate is down by 30% (from planned production rates)," a source from a low c.v. miner said. "Our mines face 7-8 hours of rainfall daily," a source from an East Kalimantan producer said, adding that this has given miners the opportunity to reduce stock levels. The same source said, "Traders are scrambling to get miners to support demand for blended material." Low c.v. coal traded for August at $24.40-25.00/t FOB, basis 4,200 kc GAR, while September transacted at around $24.50/t FOB, same basis, all for geared vessels. Despite port congestion caused by high swell at sea and slower loading activity, an international trader shared that, "buyers would prefer to take cargoes from the mines with better loading conditions, even if those cargoes were priced higher."

 

Paper

Momentum built further in the paper market with 111,000 t traded for M42 via SGX over the week. August M42 traded at $25.50-26.50/t, up from the previous week's deals at $25.05-25.50/t. September traded at $26.10-27.25/t for M42, while further out deals settled for October and Q4 - both at $28.40/t. The week before, the Q4 contract for M42 settled at $27.25/t. Spread deals were also concluded at minus $0.65 for August vs September and minus $0.90 for September vs October.

 

Source: IHS Markit.