Indonesian Coal Prices rise marginally on Low Buying Interest

Indonesian coal prices rose marginally owing to new licence regulation in Indonesia. However, buying remains subdued from India.

Indonesian coal prices have more or less remained stable amid Chinese holiday and hampered demand from India. Few exporters have increased their offers for Indonesian coal but price hike still not accepted by the Indian buyers.

India based trader said, “Price hike can’t be acceptable because of demurrage in Indian ports as it increases cost of total freight.”

Indonesian 4200 GAR is offered at USD 36.9/MT FoB and around USD 48-49/MT CFR India, which was earlier traded at USD 47/MT CFR India. Prices have risen by around USD 0.5-1/MT compared to previous offers.

Indonesian 3800 GAR is being offered at USD 30/MT FoB Indonesia and around USD 41/MT CFR India (West Coast). Meanwhile, 5000 GAR is offered at USD 61.5-62/MT CFR India.

Indonesian government in Jul’14 has implied a new license regulation, in which coal exporters have to apply for licenses to register as a certified exporter. This new license regulation, effective from 01 Oct, 2014 is creating problems for the Indonesian coal miners and exporters. About 100 miners have got license in new format and around 200 miners still struggling to get it. This in turn has resulted in shortage of suppliers and is directly hampering Indonesian coal export market.

Market experts anticipated that Indonesian coal export could decline by around 15% in upcoming months and by upto 5% in current year.

Indonesia, one of the largest coal exporting countries, has supplied around 120 MnT of coal to India ever year. Out of the India’s total import, around 60% coal has been imported from Indonesia. At an average, 11 MnT of coal has been imported by India per month.

India’s monthly Coal Import from Indonesia

If Indonesian coal exports quantity will decline by 15-20% in upcoming months, it will directly hits India as it is highly dependent on supply of Indonesian thermal coal. In this situation, India has to move on for other countries for regular supply sources. The country has imported around 35 MnT of coal from Indonesia in Q2 FY15.

India’s weather officials predicted that at the end of current week, a cyclone would hit parts of Andhra Pradesh and Odisha on East Coast of India. Major importers of the country are watching the situation and waiting for the current bookings.