Flooding due to heavy rains in some part of South Kalimantan, one of Indonesia’s main coal-producing region, has hampered loading in the past week, keeping prices of 4200 GAR at near USD 50/MT.
The adverse weather in Tanah Bumbu regency in South Kalimantan since last week has affected shipments from some miners as roads leading to nearby ports and jetty were submerged in water, said an Indian trader. The area is one of the main sources for 4200 GAR.
The trader said, because of severe flooding, some miners may seek to delay shipment for July and August until the roads are passable.
“Some miners who are affected by the flood are discussing with buyers to ship the coal in September to October, instead of July-August, when the situation is better,” the trader said by phone.
Hari Sutikno, Chief Site Officer at Tunas Inti Abadi (TIA), a subsidiary of PT Reswara Minergi Hartama, said the company’s mining activities have been hampered by heavy rainfall, but the severe wet weather hasn’t required the company to issue force majeure on shipments.
TIA has a coal concession in the sub-district of Kusan Hulu and Sungai Loban at the flooded Tanah Bumbu regency. It produces roughly 400,000 MT of coal a month, according to the company’s website.
“We expect the weather will be back to normal soon, so that the company and the community can resume activities,” said Sutikno in an email response to Coalmint.
As flooding has crimped supply from South Kalimantan, a few East Kalimantan buyers tried to benefit from the situation by offering 4200 GAR at a premium. But the offers are attracting few buyers as many Indian buyers have locked in term-contracts for 3 months, one vessel per month, with volume between 50,000-70,000 MT, the Indian trader said.
Three cargoes of 4200 GAR for term-contract were traded at USD 48.50/MT with prices agreed in May, for shipments in June to August. While spot prices hovered at USD 49-49.25/MT.
“Spot prices may be even more than that, but there’s no interest. The price is extremely high for 4200 GAR. In the last 7-8 years, I’ve never seen such high prices,” said the Indian trader, adding that Indian buyers are now in a wait-and-see mode.
The trader said the supply problem in South Kalimantan has raised concerns over coal stocks in Indian ports.
“Stocks of imported coal at ports in India are sufficient now. It had been severely down in the last 10 days, but shipment count and stocks rose again last week,” said the trader, adding that the impact of rains in South Kalimantan on shipments will be known next week.
“So buyers are not booking cargoes, they’re not taking position, they’re just waiting the situation to ease.”
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