Indonesian coal offers have remained stable this week due to limited buying in India amidst Rupee volatility and low demand for power in the country.
Sudden rise in buying inquiries from India is not seems to be supportive for Indonesian coal market as prices are still stable and on low-side. Current offers for 4200 GAR are assessed at USD 26-26.5/MT FoB for Feb’16 deliveries.
Although, demand for low GCV had increased from India, it wasn’t enough to strengthen market price.
On the other side, constant fall in sea freight rates have supported CFR India offers. This in turn has provided a relief to importers. However, depreciating Indian currency, Rupee against USD is still a concern for importers. Currently, INR is trading at 68.03 per USD.
Indonesian 4200 GAR coal mostly shipped to India and China is being traded at USD 31-32/MT, CFR West Coast of India. Recently, it is also heard that a deal for Supramax vessel of 4200 GAR was closed at USD 33/MT, CFR for Feb’16 bookings. Meanwhile, high GCV 5000 GAR and 5800 GAR are being offered at USD 43-44/MT and USD 53/MT, CFR India respectively.
However, Indonesian coal prices are stable as Indonesian market is struggling with cheaper alternative provided by South Africa and Australia.
[su_pullquote align=”right”]“At present, Chinese and Indian buyers are keen to purchase low GCV Indonesian grade, but current market is oversupplied with High GCV coal owing to limited demand for the material”, said an Indian Trader.[/su_pullquote]
Vessel freight rate
Sea freight rates have fallen by about 25-30% in last month owing to constantly slipping crude oil prices. Today, crude oil prices have slumped to USD 30/barrel, which may further drives freight prices in near-term.
Freight for shipping coal in Panamax vessel from Indonesia to India is assessed at USD 4-5/MT. Meanwhile, freight for all size of bulk vessels are in the range of USD 3-8/MT.
Indonesian coal production, export and domestic market obligation
Indonesia’s Energy and Mineral Resources Ministry reported a downfall of 14.5% in coal production during 2015, which was marked about 425 MnT for the year. However, Indonesian coal miners have cut production by 20% in 2015.
Indonesian coal production, export and consumption
| Particular | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | %Change Y-o-Y |
| Production | 217 | 240 | 254 | 275 | 353 | 412 | 474 | 458 | 392 | -14.4% |
| Export | 163 | 191 | 198 | 210 | 287 | 345 | 402 | 382 | 295 | -22.8% |
| Consumption | 61 | 49 | 56 | 65 | 66 | 67 | 72 | 76 | 87 | 14.5% |
| Price (HBA) | n.a | n.a | 70.7 | 91.7 | 118.4 | 95.5 | 82.9 | 72.6 | 60.1 | -17.2% |
Quantity in MnT
Prices in USD/MT
Source: Ministry of Energy and Mineral Resources
Indonesia’s main export market is not expected to improve significantly in short-term. However, domestic coal demand may grow in the year ahead due to accelerating economic growth, growing industrial output and new coal-fired power plants that are in-line to come soon.
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