Portside prices of Indonesian coal at Indian ports rose by INR 300-500/tonne (t) this week amidst supply concerns from the former. The Indonesian government imposed the ban on coal exports in Jan’22 on account of domestic supply shortage.
Prices for 4200 GAR are assessed at INR 7,700/t (t) ex-Kandla, up by INR 500/t, while those of 5000 GAR are at INR 9,700/t, up by INR 300/t. Prices exclude cess and GST.
However, no major trades were reported as many traders held cargoes for further clarity over the ban. It is being heard that the Indonesian government is likely to revaluate the ban on coal exports after monitoring the status of the stock at the domestic power utilities on 5 Jan’22.
“Buyers have rushed in to book quantities but traders are now holding back stock. Many of our vessels are stuck at Indonesian discharge port and it is still unclear if the documentation would even take place,” a Chennai-based trader said.
Ban decision sends shock waves in global market
The sudden and unexpected imposition of a month-long export ban on coal has created panic as the supply of around 40 mn t of the material will be affected in the global market.
Around 60-90 vessels are heard to be stuck across Indonesian waters with loaded ships even awaiting clearances, market participants informed.
The ban has come against the backdrop of miners’ inability to meet DMOs (Domestic Market Obligations) amid supply disruptions due to heavy rainfall throughout the year and rise in Covid cases in 2021.
As per the country’s DMO policy, miners are expected to supply at least 25% of their annual production to state utility Perusahaan Listrik Negara (PLN) at lower rates against exports.
As on early Dec’21, coal output in the country has reached 560 mn t, only 89.6% of the annual target of 625 mn t.
Short-term outlook
The Indonesian government is set to review its ban decision on 5 Jan’22. However, in any case, supply from the country is likely to be limited in the upcoming month, which may lift both imported and portside prices.
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