China's Fujian Guohai cancels up to 1 mil mt seaborne coal arriving in Apr

Singapore — China's utility Fujian Guohai in Fujian province has reportedly cancelled up to 1 million mt seaborne coal due to arrive in April following changes in procurement plan, a move that may support Chinese domestic coal prices, sources said Tuesday.

"Due to changes in utility procurement plan, we will cancel all vessels arriving in April," the contracts' cancellation letter from Guohai to an affected party said late Monday.

The move comes close on the heels of southeastern China coal import hub Fuzhou in Fujian province implementing import tightening measures early March to aid sliding Chinese domestic coal prices.

S&P Global Platts assessed PCC 1 and PCC 2 the 7-45 day price of FOB Qinhuangdao 5,500 kcal/kg NAR coal and 5,000 kcal/kg NAR at Yuan 533/mt Monday, down Yuan 33/mt month on month and Yuan 474/mt Monday, down Yuan 33/mt from the previous month respectively.

In view of an upcoming Chinese domestic coal benchmark setting by China's miner Shenhua this week, market sources said this move could support Chinese domestic coal benchmark.

Shenhua was merged with China Guodian Corporation in November 2017 as CHN ENERGY Investment Group Co.,LTD, the company website said.

Guohai is a local utility under China Guodian Corporation.

Shenhua and Guodian were not immediately available for comments.

A source close to the subject matter said that all tender winners affected have sent Guohai lawyer's letters following the cancellation.

About 600,000 mt to 1 million mt of low-CV Indonesian coal and a pocket of high-CV Russian coal were awarded in the April-arriving tender, several traders in China said.

"Most of the coal awarded by Guohai is low-CV Indonesian coal, and these near-term cargoes floating in the market could put more downward pressure on Kalimantan prices," a south China-based trader said.

Moreover, market sources said the impact could loom large as the May to June arriving cargoes could be subjected to similar type of cancellation, affecting a total of 1.6 million -2 million mt seaborne coal.