India: Portside prices of Indonesian thermal coal edge up despite weak demand, market uncertainty

• Indonesian indexed prices see slight increase
• Indian power plants hold 56.07 mnt of stocks

Indonesian thermal coal prices at Indian ports saw a moderate increase w-o-w on March 14, especially for lower-grade varieties. Demand from India remained muted amid substantial stockpiles at its ports, and there was uncertainty over future market trends.

Price movements at key ports

Prices of 5000 GAR coal at Kandla remained stable w-o-w at INR 7,800/tonne (t), while 3400 GAR coal at Navlakhi rose by INR 250/t w-o-w to INR 4,950/t. Similarly, 4200 GAR coal prices edged up w-o-w to INR 5,900/t at Kandla and INR 5,800/t at Vizag.

Coal stocks at Indian power plants

Indian power plants hold 56.07 million tonnes (mnt) of coal as of March 15, close to 19 days of consumption, indicating that plants have ample inventories. However, concerns have emerged, with 12 plants using domestic coal, 5 relying on imported coal, and 5 dependent on washery rejects nearing critical stock levels, as per the latest data available with the Central Electricity Authority.

Global coal price trends

Notably, Indonesian indexed coal prices witnessed slight increases w-o-w. Prices of high-CV 5800 GAR coal rose by $0.14/t to $85.37/t. Meanwhile, mid-CV 4200 GAR coal experienced a minor uptick of $0.06/t w-o-w to $49.92/t. The most significant rise occurred in low-CV 3400 GAR coal, which saw an increase of $0.25/t w-o-w to $32.28/t.

In the seaborne market, demand was muted from key consumers such as China and India, which had large stockpiles at their ports. As a result, buyers in Asia adopted a wait-and-watch approach, given the ample supply in these markets.

HBA prices may decline from 15 Mar

Indonesian coal producers expect a price reduction in the 15 March HBA announcement, but demand may remain limited. Potential royalty hikes could also push prices up. Meanwhile, China and India, relying on domestic supplies, are reducing imports, which has led to increasing competition for Indonesia from sources such as Australia, South Africa, Russia, and the US.

Outlook

The thermal coal market is cautiously optimistic, with slight price increases likely in Indonesian indexed coal prices. However, weak demand from China and India, rising freights, and potential royalty hikes may push buyers to alternative sources. The market is expected to remain stable in the short term, with long-term trends influenced by global supply and Indonesian policies.