Indonesia Coal Market Subdued as Strengthening Dollar Keeps Indian Buyer at Bay

A strengthening US dollar against rupee has kept Indian buyers on the sidelines, keeping trading in Indonesia’s coal market to near muted amid tepid demand from China and other Asian buyers, traders said.

“Indian (demand) part is the worst hit because of the exchange rate issues. Imports are becoming more expensive for them. But I don’t know how they’re going to meet demand. How long can they hold,” said an Indonesian trader based in Jakarta.

Rupee exchange rate has weakened to around 73  per Dollar from previously less than 70, which increases costs of importing the power-station fuel.

But, the Indonesian trader said, some producers in South Sumatra were offering coal at around USD 1 discount from the index as they’re looking to off load the fuel.

Another trader said traders are offering November cargoes but they are requesting firm counter bids for 4200 GAR for the Indian market.

Offers are currently structured as the weekly average price of ICI + USD 1-2/MT depending on whether the vessel is g-to-g or a gearless Panamax vessel, the Indian trader said.

While Indian demand slows, requests for winter restocking has yet to be heard, although ASEAN buyers are still buying, the Jakarta trader said.

With lackluster market, the price of mostly-traded Indonesian 4200 GAR is expected to hover around $38/mt.

“There’s still steady buying. Long term contract still being fulfilled. Sport cargoes are still moving. But it doesn’t generate any hot interests,” the Jakarta trader added.

Tepid demand has prompted the government to cut the country’s monthly benchmark coal prices for the second time to $100.86/mt in October, from $104.81/mt in September.

According to the data compiled by CoalMint Research, Indian imports of Indonesian coal had fell 10% M-o-M to 8.62 MnT in Sep’18 from 9.6 MnT in Aug’18, but were 11% higher on the year from 7.8 MnT in Sep’17.

Indonesia Aug’18 Exports at 13-month Low:

Indonesian coal exports in Aug’18 slipped 1% Y-o-Y to its lowest level since Jul’17, led by steep falls in shipments of higher calorific coal.

Indonesia exported 32.5 MnT coal of all types of coal in Aug’18, down from 32.9 MnT a year earlier, and down sharply from 38.32 MnT in Jul’18, as per the data provided by BPS statistics. Out of the total amount of coal shipped in Aug’18, 30.17 MnT was thermal coal.

The country’s exports have reached 280.42 MnT during the first 7 months of CY18 (Jan’18-Aug’18), up 12% Y-o-Y from 250.39 MnT recorded in the corresponding period of CY17.