China growth worries weigh on thermal coal price

THERMAL coal prices moved lower after three days of gains, with trading sentiment taking a turn for the worse on worries over China’s soft preliminary manufacturing result, according to the ANZ Bank.

Lou Caruana

Thermal coal was down by 0.6% to $US81 per tonne.

“There also appears to be greater availability of higher quality South African material being offered to Asian markets – potentially competing [with] Australian supplies as freight rates to Asia picked up,” the ANZ Bank said in a report.

“Indian buying interest remains low, with the monsoon season and low Indian rupee foreign exchange rate hindering imports.”

Last week thermal coal futures appeared to have stabilised above the $80/t level but the mood in the market remains subdued, according to ANZ.

“Reports suggest seaborne suppliers are facing increasing competition from Chinese domestic producers who are able to allow domestic buyers to delay payments amid tighter cash flows,” it said.