Indonesian coal prices hold steady this week, as the return of Chinese buyers for low CV coal requirement turned sentiments from negative to positive, however, prices in the market to remain rather stable.
Indonesian 4200 GAR coal was assessed at USD 39/MT, on FoB basis.
Demand from China is expected to pick up as they return for one last round of buying before the start of Golden week holidays.
Indian buyers on the other hand were taking time to conclude deals, given the weakness in India rupee. Buying interest for 4200 GAR among the Indian contingents was heard at USD 38-38.5/MT.
However, demand from India is expected to rise as the power utilities are low in stock, besides the shortage of domestic coal availability should raise the buying interest for imported coal.
Mid CV market remains subdued: Coal index for 5800 GAR had witness a slight uptick, assessed at USD 70.67, however, 5000 GAR coal index continued its declining trend during the week.
Market participants had anticipated that there not interest for Indonesian mid-CV coal among Chinese buyers as the government had not yet cleared its stance on quota of coal stock to be maintained at the power plants, which was kept the mid CV market subdued.
The utilities which still have some quota left were buying; otherwise, there was hardly any buying interest. Indonesian 5000 GAR was assessed at USD 53-54/MT, FoB Kalimantan.
Offers for Indonesian 5500 GAR coal were heard at USD 61-62/MT on FoB basis, from a large miner. But a small miner had quoted the same coal at USD 71/MT, which underlines the price variation among the miners.
The later was offering coal at index basis, which also include guarantee specification for the coal that was to be delivered.
Rise in currency aid support to the export offers:
Indonesian coal prices have been on a downtrend since Jun’18, wherein the free fall had indeed washed-up the gains that the miners had attained last year when the prices were high. Nevertheless, the miners were relieved by the rise of Indonesian Rupiah against US dollar.
Commenting on the upsurge in Indonesian Rupiah, an Indonesian coal miner said that he was not worried of the fall in coal index price as far as the domestic currency was strengthening, but the fall in prices had certainly nullified the effect.
He added, 6-month ago 4200 GAR coal was priced at USD 42/MT on FoB basis when 1 USD was equal to 13800 Indonesian Rupiah, but now when 1 USD has increased to 14900 Rupiah, the price of 4200 GAR has fallen to USD 38/MT, which does not makes much change in terms of earning on coal exports. However, he was hopeful that the coal prices will increase soon.
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