Indonesian thermal coal prices of low-calorific value (CV) grade continued to rise steadily amid strong demand from Chinese traders. Mid-to-high-CV grade prices, however, remained on the lower side due to weak European demand amid mild weather conditions and as the countries’ winter inventory was filled above expectation.
Indonesian miners, however, were heard holding back offers amid higher demand expectation in the upcoming weeks of winters.
Elevated domestic coal prices have compelled Chinese power utilities to seek overseas supply even at a premium of $3-5/t.
China’s portside thermal coal prices have been on a rise over the last one month amid persistent supply constraints, safety inspections in the run up to the Communist Party meet, and Covid-19 flare-ups.
Mid-CV Indonesian 5500 NAR prices are over $45/t cheaper over China’s domestic prices for the similar grade.
According to market participants, despite rising imports of Russian coal, Chinese power companies preferred to stock up Indonesian low-CV coal in fear of a harsh winter this time.
Weak rail capacity and congestion on the railway line in the Russia-China border were reported to be affecting shipments from Russia.
India’s demand steady
Import inquiries from Indian buyers remain weak amid reduced industrial activity during the Diwali festival.
Market participants, however, see weak bulk bookings in the upcoming weeks amid rising supplies of domestic coal to the power and non-power sectors.
“With China’s renewed interest in Indonesian low-CV coal, inquiries have declined to a great extent. Buyers are reluctant to pay premiums and bid at index-linked prices,” a Delhi-based trader said.
Short-term outlook
Strong demand from China will support Indonesian coal prices in the near term with low-CV prices remaining strong. Poland and the Netherlands are also making Indonesian coal bookings with the resumption of operations of several coal-fired power plants in these countries ahead of the winters.
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