India: Sharp correction in imported Indonesian coal prices pulls down portside prices by INR 1,000/t w-o-w

Indian portside prices of Indonesian coal fell by INR 1,000/tonne (t) this week. The fall comes on the heels of imported Indonesian coal prices seeing a sharp correction of $13-57/t.

In the past two weeks, portside prices have seen a correction of INR 5,000/t.

Price of the 5000 GAR is currently assessed at INR 9,500/t, while the 4200 GAR is at INR 8,500/t ex-Kandla. Prices exclude cess and GST.

However, any sharp fall in portside rates has been averted due to limited availability of stock at ports and reduced number of vessel arrivals from Indonesia.

According to CoalMint’s vessel line-up data, 1.07 million tonnes (mn t) of thermal coal are arriving from Indonesia between 9-14 Nov’21. Majority of the end-user’s units last week stayed on the sidelines due to the Diwali festival, while enquiries this week are expected to remain weak as market participants adopt a wait-and-watch mode.

Meanwhile, the domestic coal supply situation in India has also been improving with coal stockpiles at Indian power plants rising to 13.09 mn t as on 7 Nov’21, sufficient for seven days of usage from the lows of 8.01 mn t as on 30 Sept’21, as per data from the Central Electricity Authority (CEA). 

Why did Indonesian coal prices plunge?

After rising sharply since late last year, Indonesian prices began their downward trajectory since the past two weeks as procurement from China slowed down significantly.

Cheaper domestic coal in China and improved supplies compelled traders to assess the market conditions as thermal coal futures fell to RMB 920/t ($144/t) on 8 Nov’21 from the highs of RMB 1,908 /t ($298/t) on 19 Oct’21.

Indonesian Coal Index (non-coking) prices

Prices in $/t

Outlook

CoalMint believes, portside thermal coal prices are likely to remain range-bound in the coming week due to volatility in the international market and improving domestic coal supply scenario in India.

Moreover, according to market participants, any further correction in imported Indonesian coal prices may be unlikely amid tight supply  due to heavy rainfall which has impacted  the small to medium-sized miners in this country.