Despite a decline in portside prices of Indonesian thermal coal, trade remained muted as buyers await a further price correction as continuing operations at such rates became unviable.
The decline in prices came amidst a fall in import prices due to reduced buying interest from China surrounding its lockdown restrictions.
With limited stock available, prices of GAR 5000 kcal/kg coal have eased by INR 500/t w-o-w to INR 12,500/t, at Kandla, while those of 4200 kcal/kg coal, are assessed at INR 9,800/t, down by INR 700/t w-o-w at Navlakhi Port. Availability of the same remains scarce at Kandla Port. Prices exclude cess and GST.
Trading activity slows down sharply
According to market participants, elevated coal and gas prices since the beginning of this year have compelled several end-user companies in the western region to either work under minimum capacity or suspend operations.
Procurement by such companies has declined with stock accumulation now being made for up to two-three days over that was made for a week or month earlier.
“There are no export orders with firms, while operational costs are sky-rocketing. A major portion of the ceramic industry situated in the Morbi region of Gujarat have largely shut down their plants,” a Gujarat-based trader said.
In the southern region of the country, the situation remains the same as paper, textile industries stick to small-to-medium terms of purchases.
Cement manufacturers, on the other hand, were heard to be procuring high-CV Indonesian origin coal amid limited availability of pet coke, a Karnataka-based trader said.
This came amid lower imports of pet coke seen in the last month due to higher prices and a sharp rise in voyage time of 45-60 days from USA, especially during persistent uncertainty in the international markets.
India’s pet coke imports fell by 36% m-o-m to 0.5 mn t in Feb’22, CoalMint data showed.
International market scenario
The Covid-19 outbreak in China dented Indonesian coal demand while logistic disruption within the country affected transportation at power plants.
Tight supply in Indonesia, on the other hand, resulted in a bid-offer mismatch as miners continued to offer premiums despite a fall in index prices. Heavy rains also affected loading from East Kalimantan.
Indonesian miners continued to hold talks with the Directorate General of Mineral and Coal to follow up on coal supply agreements for 2022.
“Importers are unable to take purchase calls on China’s absence from the market amidst uncertainty of whether there will be any further price correction,” a Delhi-based trader said.
Short-term outlook
Indonesian portside prices are under pressure amid weak buying appetite of end-users. However, few other vessels arriving in the upcoming week that were booked at higher index prices earlier this month are also raising challenges for traders as imported prices remain weak, as per CoalMint assessment.
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