With heavy rainfall in several parts of India, portside trading of Indonesian coal has turned sluggish. Amid supply issues, many domestic end-users of Indonesian coal, other than those in the power sector, have reduced production capacities.
There are concerns related to rake allotment, long vessel waiting period at ports, and weak domestic demand that have compelled chemicals producers, brick kilns and textile units, especially in the western belt, to cut production thereby curbing their coal-buying appetite.
According to market participants, rake allotment for the non-power sector remains under pressure as the government continues to prioritise coal shipments to the power sector. This has left the non-power sector at the mercy of coal transport via trucks, which usually increases delivery leads, resulting in consumers trimming production.
Heavy rainfall at the smaller ports, on the other hand, has exerted pressure on the larger ports such as Kandla and Navlakhi to accommodate bigger vessels, which resulted in an 8-10-day waiting period for Indonesian vessels to unload at ports.
Rising moisture accumulation in imported coal has also compelled traders to sell at lower rates as buyers avoided bulk bookings.
“Several ceramic industries in the Morbi region, a major buyer of Indonesian coal, are set to close operations from 10 August to 10 September, leading to a loss of 400,000 t of coal procurement,” a ceramic manufacturer said.
As per traders, several coal-consuming units have been blending low-CV 3600 kcal/kg GAR Indonesian coal with high-CV 6200 kcal/kg NAR Russian coal to balance costs.
Portside prices
*Price in INR/t. Exclude cess and GST.
Chinese demand for low-CV coal emerges
Despite a sharp fall in mid-and high-CV Indonesian coal prices, low-CV coal rates were stable as procurement demand from China emerged amid rising power demand in the country.
However, traders were heard procuring more mid- to high-CV coals from Russia due to competitive prices.
European demand takes a beating
Despite Europe’s strong demand for coal amid sanctions on Russia, shipments from Indonesia failed to pick up pace amid high-CV coal demand there, which is not available in ample measure, with limited supplies being sold to Asian countries like Japan and Korea. Also, there is shortage of capesize vessels which is limiting trade between the two countries.
“Very few large-scale miners have the capacity to export high-CV coal to Europe which is why shipments to the country have not picked up pace. Most of the mines deal with smaller shipments mainly to Asian buyers,” an Indonesian miner source informed.
Short-term outlook
Portside Indonesian coal trades are likely to remain subdued amid seasonally weak demand conditions in the domestic market during the monsoon. Demand from China also may remain under pressure due to availability of cheaper Russian coal.
To know more about Indonesia’s coal demand in India and its changing trade dynamics in the domestic market join us at India Coal Outlook Conference. CoalMint will be hosting the India Coal Outlook Conference on 3-4 August 2022 at The Lalit, New Delhi, to discuss the key issues pertaining to domestic coal production and supply, the government’s objective of controlling imports and domestic supply gap affecting many industries, the need to increase the purchasing power of Indian steel companies in the volatile global coking coal market as well as issues related to decarbonization of the coal value chain.
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