Portside prices of Indonesian coal rose further by INR 700-2,000/t this week amidst limited vessel arrivals from Indonesia along with the rise in imported prices.
Prices for 4200 GAR rose by INR 600/t to INR 9,500/t at Kandla Port, while that of 5000 GAR rose by a whopping INR 2,000/t to INR 13,000/t. Prices exclude cess and GST.
Trading activity at Indian ports, however, slowed down slightly as end-users their purchases, focusing more on procuring domestic coal, market participants informed.
“Given the volatile imported coal market, several buyers have raised their domestic coal usage quotient. But the current rise in domestic prices may further weigh on operations as capacity utilisation has already reduced drastically since last year amid escalated raw material prices,” a Surat-based trader said.
Higher FOB rates were also seen denting buying appetite of importers as they awaited the Chinese Lunar New Year holidays to begin before making fresh purchases.
Imported coal procurement from power producers in the country, in particular, had remained weak in CY’21 when coal prices sky-rocketed. However, several producers are now seeking to boost coal imports as domestic supplies fall short of demand.
The country’s largest power producer, NTPC, has lined up several fresh tenders for imported coal procurement to strengthen its overall fuel security. This came as the power ministry asked utilities to ramp up their imports, mainly for blending with domestic coal.
As on 23 Jan’22 thermal coal stocks with power plants were assessed at 25.02 mn t, down 32% y-o-y, data from the Central Electricity Authority showed.
Indonesia’s supply concerns remain
Although the Indonesian government has lifted the coal export ban, full-fledged shipments from the country may take some time to gain strength with the new regulations in place.
As per the Indonesian government, miners will not be allowed to export coal until they meet their domestic market obligations (DMO). From hereon, coal companies will have to submit monthly reports of DMO fulfillment data, instead of the previous annualized procedure.
Those failing to meet their target will face a 60-day operating ban and fines.
The country has a total of 600 coal mining companies and 171 have been allowed to resume exports so far.
Procurement demand from China may remain limited during the holidays. However, limited coal stock at northern ports may compel utilities to seek supplies.
Short-term outlook
Indonesian, as well as portside coal prices are likely to remain elevated in the coming week as the pace of supply from the country remains limited. Rise in global thermal coal prices surrounding the ongoing tension between Russia and Ukraine may also support the rise in Indonesian coal prices.
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