Portside trading activity of Indonesian coal was subdued last week despite a fall in imported coal prices as buyers avoided taking any major bets amid weak domestic demand.
“Despite the coal supply shortage, overall buying appetite is sluggish in the market due to the recent fall in steel prices. Power and cement companies are bringing in vessels directly due to cost advantage, while the other sectors are largely restricted to small parcels,” a west India-based trader said.
The absence of Chinese traders from the global market, on the other hand, further pulled down imported prices as high CV grades eased by $6/t w-o-w after rising sharply on the back of strong European and Japanese demand.
The fall in low- to mid-CV grades, however, was limited as inquiries from power utilities in India remained upbeat.
With regard to portside prices, 4200 GAR kcal/kg prices were assessed at INR 9,800/t at Kandla Port, down by INR 200/t w-o-w, while those of 5000 GAR kcal/kg were at INR 12,600/t. Prices exclude cess and GST.
Coal India eyes higher imports
In a bid to avoid any power shortage, the government has directed state-owned CIL to be prepared to import 12 mnt of coal for power utilities for the next 13 months.
The state-owned miner will import coal for blending use by utilities on G2G basis, for the first time since 2015 amid expectation of higher electricity demand during the October-December 2022 quarter (post-monsoon).
Several state-run utilities and independent power producers have also started following the suit as CIL has already received indents for importing 2.4 mnt of coal from West Bengal, Punjab, Rajasthan, Madhya Pradesh, Andhra Pradesh, Gujarat and Maharashtra.
Tamil Nadu, Karnataka and Haryana, on the other hand, have started importing coal on their own, as on 4 June, according to media reports.
The domestic miner is likely to import a large chunk from Indonesia, given its higher usage of low- to mid-CV coal in the domestic power plants.
Portside stock also remains higher as coal users have been getting their vessels directly amid volatile market, while the volumes of stock and sale trades have reduced.
Chinese domestic prices ease
A sharp fall in China’s domestic coal prices continue to keep traders rom the global market at bay as top economic planner, NDRC, has imposed a price cap on thermal coal to keep it within a reasonable range.
Besides higher coal imports from Russia, the government has also been expanding coal production capacity.
Short-term outlook
Demand for Indonesian coal is likely to remain strong in India surrounding a coal supply crunch in the country. Domestic portside trading activity may get hampered surrounding the upcoming monsoon season when coal-consuming units tend to temporarily halt production.
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