Indonesian thermal coal prices are likely to rise in the coming weeks as Chinese power utilities are actively seeking cargoes for October delivery before the Communist Party meet.
In a bid to ensure energy supply during the major political gathering, Chinese authorities have instructed utilities to build stockpiles.
This has come even as broader safety scrutiny is undergoing across Shanxi, Inner Mongolia, Shandong, Hebei, and other provinces.
Major procurement is in the low-to-mid CV category such as 3000-4800 kcal/kg NAR coal, as they are blended with Russian supplies.
As per market participants, buying activity would slow down around this meeting and would resume later in the month.
On the other hand, Indian buyers were booking cargoes at premiums in anticipation of higher demand around the festival season.
As per an Indian importer, Indonesian supplies at $4-5/t premium are still cheaper against the expectation of higher coal prices during winter.
Amid domestic coal supply crunch affecting the non-power sector, Indian buyers have largely relied on imported supplies this year.
Supply disruptions in Indonesia
Heavy rainfall in the South Kalimantan region has disrupted mining activity as miners raised offers incentivizing a strong demand environment for winter restocking demand.
Miners have been boosting production this year with strong demand from Europe as utilities secured supplies ahead of the winter in a bid to offset the gap in Russian gas supplies. Shipments to Poland and Italy remain strong, while enquiries continue to rise from Germany and the Netherlands.
Indonesia’s coal production is expected to rise only marginally by 3% year-on-year to 629.9 mnt in 2022.
Short-term outlook
Indonesian coal prices are seen rising in the coming week amid strong winter restocking demand in China and Europe. Tight LNG supplies from Russia to Europe could also boost Indonesian coal demand.
Leave a Reply