Prices of Indonesian high-calorific value (CV) thermal coal rose sharply in line with global prices as the war between Russia and Ukraine intensified with several countries imposing sanctions on the former.
Mid-to low-CV coal prices, however, rose marginally as enquiries from Chinese traders picked up slowly, with import tenders issued for building up inventory at power plants before summer.
Several Chinese power utilities such as the Huaneng Group and Shidongkou power plant in Shanghai had floated tenders for low-CV Indonesian coal.
Chinese traders were heard procuring more of low-CV grades amid a sharp fall in domestic prices following the NDRC intervention last week.
The country’s economic planner had set a price guidance for 5500 NAR grade coal at RMB 570-770/t ($90-122/t) at Qinhuangdao port for medium- and long-term contracts. Earlier, it had mandated to bring down prices below RMB 900/t ($143/t).
Meanwhile, Indonesian coal supply remained limited with miners prioritising old contracts and offering current stocks at a premium. The energy ministry announced to keep 20% (127 mnt) of its total coal production (663 mnt) for the domestic market in 2022 to avert an energy crisis.
State-run power utility PLN would be supplied with 64.2 mnt of coal, while independent power producers would be provided with 62.9 mnt.
Limited stocks at Indian ports
Indonesian coal stocks at Kandla remained limited with a majority of trades being concluded at Navlakhi Port, market participants informed.
The uncertainty around thermal coal prices, further weighed on the buying appetite of end-users as they preferred making small-parcel trades.
Indian importers, on the other hand, also remained in the sidelines and avoided making major bookings awaiting further price clarity following NDRC’s announcement last week.
“It is very difficult to predict China’s coal demand and purchasing pattern for this year. But, in any case, prices are too high to secure any major quantities currently,” a Surat, Gujarat-based coal importer said.
Higher Indonesian coal supply is seen easing the supply shortage at ports, as a total of 2.1 mnt of coal will arrive at various Indian ports till 11 March, CoalMint’s vessel line-up data reveal.
Short-term outlook
Portside Indonesian coal prices are likely to remain supported amid higher imported coal prices and limited supply at ports.
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