BEIJING/SINGAPORE, Nov 12 (Reuters) – Chinese coal traders are selling cargoes at losses or trying to delay imports after Beijing’s market interventions triggered a 50% price drop that saddled them with unprofitable supplies, according to several market participants.
Domestic thermal coal futures have halved over the past three weeks after the government ordered top miners to slash prices to a set target and raise output immediately to curb prices that had nearly quadrupled this year. read more
The consequence of the Chinese government’s intervention is imports are likely to slow in November and December after already easing in October.
Amid the price free-fall, importers have tried to quickly sell on their coal shipments they booked in October when prices were at records, taking losses of between $40 to $100 per tonne, said three China-based coal traders.
Some buyers walked away from contracts, forfeiting their deposits estimated at about 10% of the cargo’s value, which prompted some traders to raise deposit requirements this week to up to half the shipment value, said a Singapore-based trader with a Chinese company.
Other buyers are trying to delay incoming shipments in the hope that they can sell their current supplies later if prices rebound.
“You don’t have much choice. Either swallow the losses for the cargoes that already arrived, or re-negotiate with upstream suppliers and postpone loadings for future shipments,” said one of the China-based traders, who works with a state-run utility who …….