*Demand from China subdued due to Labour Day holidays
*Indonesian producers prioritise domestic sales
Indonesian high-CV thermal coal prices rose last week. Prices for high-CV (5800 GAR) coal increased by $0.93/t, settling at $92.88/t. Indonesian mid-CV coal prices (4200 GAR) increased by $0.32/t to $54.95/t, while prices for low-CV (3400 GAR) coal prices increased by $0.17/t to $34.77/t. Prices mentioned are on FOB basis.
On the supply side, Indonesian producers continued to emphasise on ensuring domestic supply after the newly elected government initiated projects in various sectors, including cement, iron ore, nickel, and aluminum. While prioritising the domestic market has not affected the seaborne market, there remains sufficient availability of cargoes. Fresh demand has emerged from Vietnam and the Philippines, although market participants do not anticipate a significant impact on prices due to the relatively small market size.
Asian thermal coal market activities remained limited last week as Chinese buyers were on holiday due to Labor Day holidays. Meanwhile, inquiries from other Asian consumers such as India, Thailand, and Vietnam increased amid rising demand in the power sector. Miners from Indonesia were expecting demand to pick up after the Labor Day holiday.
Demand from China remained subdued last week due to the Labor Day holidays. Seasonal demand in China is limited, but due to rising temperatures in parts of the country other than southern China, demand is likely to rise in the near term. In southern China, thermal coal demand has currently been reduced due to incessant rain. However, southern Chinese utilities are expected to soon import coal with low to high calorific value as players* return from holidays due to improving conditions in China.
Pre-monsoon demand in India is lower currently than in previous years due to slower government spending on certain infrastructure projects. Coal reserves at Indian power plants had reached 47.92 mnt as of last month end, marking a notable 33.7% increase compared to the previous year’s levels. These ample coal stocks have consistently provided more than 16 days of supply for several weeks, ensuring a steady and reliable energy source for the nation’s power generation. However, power plant consumption is expected to soon increase, with this year’s peak demand projected to exceed that of last year.
Portside prices stable
Thermal coal prices for 4200 GAR coal at Kandla Port stood at at INR 6450/tonnes. This can be attributed to sufficient stocks at thermal power plants and lower pre-monsoon demand.
Outlook
Indonesian coal prices may increase in the near term as demand from India’s power sector improves, while rising temperatures in parts of China are expected to boost demand. Inventories at Indian ports and power plants may drop due to increased power demand.