Portside trading activity for Indonesian low-CV coal in India has picked up pace even as increased bookings are being reported from China. This, coupled with the monsoons ending next month, has seen procurement of low-CV coal gaining momentum.
Several end-users in India were heard to be enquiring for 3400 GAR coal to build up inventory in a bid to capture the existing price levels. This came amid the fear of a price rise in the coming weeks with China increasing bookings beginning last week.
After a lull of almost two months, enquiries and bookings of low-CV Indonesian coal from China have gained momentum amid extreme heatwave and power outages in South-west China.
A record-breaking drought has caused some rivers in China – including parts of the Yangtze – to dry up, affecting hydropower, halting shipping and forcing major companies to suspend operations. This, coupled with heavy rainfall in Northern China, has hampered coal production there compelling power utilities to increase enquires for imported Indonesian coal once again.
Portside prices of Indonesian coal
*Price in INR/t
Interestingly, the demand for mid- to high-CV Indonesian coal in India remains subdued amid high prices. Also, many end-users industries continue to remain shut during the monsoons and are likely to resume operations after 10 September.
India’s thermal coal imports from Indonesia continued to remain high this year, with shipments at 29 million tonnes (mnt) during the June-July period as against 20 mnt during April-May.
A large amount of stock accumulation at ports has restricted any significant rise in portside prices.
India’s power consumption
With the monsoons and subsequent cooler temperatures, India’s power demand too has cooled off. In fact, the Indian government has recently revoked its earlier order (dated 28 April) to domestic utilities to import 10% of their thermal coal requirement for blending. Independent power producers, states and the Coal Ministry can now decide the blending percentage after assessing domestic coal availability.
As on 18 August, coal stockpiles at Indian power plants were assessed at 31 mnt, sufficient for 15 days of consumption. Stocks had declined to their lowest at 21.94 mnt in April.
Short-term outlook
Portside Indonesian coal trades, especially low-CV coal, is likely to gather pace in the near term with China expected to be in the import market for some time. Demand for other grades may pick up pace from September onwards with the monsoons gradually receding.
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