Indonesia witnessed a sharp decline in coal prices this week as China has nearly stalled coal buying from the country.
After securing coal demand for summer when electric power loads on the transmission grid in parts of China soared late last month because of high temperatures, Chinese coal demand for low CV Indonesian coal seems to have almost dried up.
As per the data provided by General Administration of customs, Chinese coal imports in Jul’18 had hit its highest monthly total since Jan’14. Imports had increased 14% M-o-M to 29.01 MnT in Jul’18, which was also 49% higher on the year compared with 19.46 MnT in Jul’17.
An aggressive buying in the previous month, has certainly weighted down the Indonesian low CV coal market, which is mostly preferred by the Chinese buyers.
Offer price of 4200 GAR coal have slide down to UD 41-42/MT this week which had been quoted at USD 50/MT a month ago. Offer for 3800 GAR were heard at USD 35/MT on FoB basis.
An Indian trader had commented that Indonesian low CV market was badly affected by lack of Chinese activities, and he was expecting the 4200 GAR prices to go within 38 levels. However, regarding the high CV coal market, he anticipated that the higher prices across the global coal market would resist any steep fall, as seen in the low CV market.
Moreover, high CV coal prices would also seek support from the Indian buyers as they will resume their coal purchasing after the monsoons.
Indonesian 5000 GAR coal was offered at USD 59-60/MT on FoB basis. While for 5800 GAR coal, bids were heard at USD 77-78/MT, against the index price of USD 76/MT. Market participants had informed that this particular grade was bid at a premium to the index price.
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