Australian thermal coal prices which surged towards May-end remained firm at $73-74/tonne (t), FoB basis over the past two weeks. However, Indian buyers of this coal have shown limited interest and are resisting to book large volumes at these price levels.
In addition, Indian buyers of Australian coal from the cement and power sectors are heard to have stockpiled requisite volumes before monsoon.
On the supply side, there is a dearth of spot cargoes for the June-July period. The 6,000 NAR grade offers are heard to be available for Sept’21 loading at $115/t, FoB and the 5,500 NAR grade is at $73-74/t, FoB Newcastle for the second-half of Aug’21 loading.
U.S. coal – a cheaper option for cement manufacturers
Indian cement manufacturers are switching to thermal coal over pet coke amidst the latter’s escalated prices (US 6% pet coke is currently assessed at $131/t CNF India). However, with the recent surge in Australian 5,500 NAR prices ($100/t CNF India), US 6,900 NAR coal ($127/t, CNF India) has become a more economical option (cheaper by 4%) on per calorific value (CV) basis.
Australian thermal coal prices are getting support from markets like Japan, Taiwan, and South Korea. After issuing a tender of 2 million tonnes (mn t) in the last week of May, Taiwan’s Taipower has again issued a tender to procure 800,000 tonnes of coal between Sept-Dec’21. The material is to be sourced from Australia, South Africa or the US. Also, demand for Australian coal from Japan and South Korea has risen due to a warmer season ahead in July and August.
Australian coal coming to India
As per CoalMint’s vessel line-up data, about 0.52 mn t of Australian thermal coal is expected to arrive at Indian ports between 16 Jun-8 Jul’21 with the chunk of it going to Mundra and Dahej ports. Around the same time last month, more than double of the above quantity, ie 1.52 mn t, of Australian thermal coal arrived at Indian ports when its price was hovering around $57-58/t, FoB Newcastle.
What lies ahead?
Australian thermal coal prices are expected to remain elevated amidst burgeoning demand from Taiwan, South Korea, and Vietnam. Any drop in prices is possible only when other-origin coal prices like South Africa and Indonesia undergoes major corrections in the coming days.
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