Portside prices of Indonesian thermal coal continued to remain elevated this week, rising by INR 500/t w-o-w amid a domestic coal supply crunch and limited availability of imported coal vessels at ports.
As per CoalMint’s assessment, prices of GAR 4200 kcal/kg are assessed at INR 10,700/t at Kandla, while that of GAR 5000 kcal/kg are at INR 13,000/t. Prices exclude cess and GST.
Portside trading activity from the non-power sector gained momentum this week on limited domestic coal availability. These sectors are completely reliant on imported stocks. However, buyers still preferred booking coal in small quantities amid uncertain market conditions and unreasonably high prices.
On the other hand, since sellers had booked imported material at higher rates in March — when coal prices had reached all-time high levels — they are finding it difficult to lower their offers.
“With higher bid-offer disparities, bulk deals have come down significantly. Several units are just running at minimum capacity to avoid losses,” a Surat-based trader said.
Thermal coal stock at Kandla Port reduced further, supporting prices. From 1.3 mnt 24-28 April, these are down 9% w-o-w, CoalMint’s stock report reveals.
Power sector facing coal shortage
Amid the ongoing rake scarcity, power plants based near the coastal belt which use domestic and imported coal blends are left with no option but to utilize costlier imported coal.
In a bid to step up coal supplies to plants, Railways has cancelled several passenger trains to free up tracks for goods trains carrying the fuel to power generation sites.
Several state-owned aluminum producers were also sourcing 200 MW of power from open sources on a daily basis amid a coal shortage, a Delhi-based trader said.
According to the Central Electricity Authority (CEA) data, thermal coal stock at power plants were assessed at 21 mnt, sufficient only for 8 days of consumption as on 28 April 2022.
India to receive 1.50 mnt of Indonesian coal by mid-May
With the domestic coal supply crunch expected to aggravate further amid the ongoing summer, Indian importers also showed rising interest in Indonesian coal purchases.
Thanks to the absence of Chinese buyers, imported prices have remained stable over the last few weeks.
As per CoalMint’s vessel line-up data, a total of 1.5 mnt of Indonesian coal-laden vessels are scheduled to arrive at various Indian ports during 2-17 May.
Out of this, Adani Enterprise is the highest importer with 0.3 mnt, followed by Swiss Singapore at 0.28 mn t, and Semb Corp Gayathri Power at 0.24 mn t.
Chinese buyers recede to the sidelines
Ahead of the Labour Day holiday from 30 April to 4 May, Chinese buyers kept to the sidelines.
Boosting imports further, the government recently lifted import tariffs of 3-6% on all types of coal. However, the move is also seen as having the least impact on Indonesian coal as it already attracts zero duty.
According to market participants, the withdrawal of the tariff is seen as increasing more avenues for Russian and Mongolian coal at competitive rates.
Short-term outlook
Indonesian portside prices are likely to remain higher amid tight domestic supply conditions and elevated imported prices. Weakness in Chinese demand may, however, cap any major upside in imported Indonesian prices.
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