Despite an indefinite ban by China, Australian thermal coal offers for 5500 NAR have moved up by another $6-7/t against last Monday’s offers. Currently the same are being heard at $62/t, FoB Newcastle basis and freight to India for panamax vessels is assessed at around $15/t.
The distressed selling offers by Chinese to Indian market are heard at around $67-68/t CFR India basis which is lower against the direct offers from Australian sellers.
However, Indian buyers of Australian coal seem to have adopted a wait-and-watch mode and are not making any significant bookings because of sufficient stocks with them. India imported about 1.12 mn t between 1-21 Dec’20 with 0.67 mn t expected by 30 December against imports of 1.12 mn t in the previous month of November.
“We have enough stock to last for the next few weeks. We expect Australian thermal coal prices as well as other-origin prices to correct by mid-January after which we would make further bookings”, quoted a cement manufacturer based in Hyderabad.
While China has imposed an indefinite ban on the imports of Australian coal, the country’s thermal coal prices are getting support from alternate buyers like Japan, Vietnam and Pakistan. This is because its close competitor, South African coal, has become costlier in the past few weeks amid increased demand from China and supply cuts by miners.
The Indonesian and South African coal prices have also moved up significantly during the past one month. The popular grade of Indonesian coal, 5800 GAR, used by cement sector has moved up by 22% m-o-m and is currently assessed at $$62/t FoB basis (as per the index) while the South African API4 index prices has risen by 34% m-o-m and is assessed at $90/t.
Outlook
CoalMint believes that the next two weeks will be a dull period for the coal sector due to the holiday season. Post that prices are expected to correct a bit as domestic thermal coal in China cannot be sold above RMB 640/t ($98/t) (as per the directives of NDRC) which will generate interest of Chinese power utilities in domestic coal and indirectly impact the imported coal demand.
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