- Coal inventories at Indian thermal power plants decline w-o-w
- Despite price hike, cautious buying persists due to ample stocks
Indian portside prices of Indonesian-origin thermal coal surged to their highest levels in nearly three years on 29 May 2026, with w-o-w gains of INR 200-600/t recorded across major calorific value (CV) grades. The rally was primarily driven by firm international coal indices, rising freight costs, constrained spot availability, and growing uncertainty surrounding upcoming Indonesian mining regulations, which collectively pushed replacement costs higher.
Market participants noted that buyers largely continued with requirement-based procurement strategies, while traders refrained from accumulating significant inventories amid subdued industrial sentiment and seasonal demand uncertainties ahead of the monsoon period.
Thermal coal rally gains momentum across key imported grades
Among key imported grades, high-grade 5,000 GAR coal prices increased by around INR 100/t w-o-w to approximately INR 10,900/t at Kandla and INR 10,800/t at Visakhapatnam. The increase was supported by elevated international benchmark prices, limited spot cargo availability, and higher replacement costs, with current price levels last witnessed in late 2022.
Mid-grade 4,200 GAR coal registered the sharpest increase of nearly INR 600/t w-o-w to around INR 9,000/t at Kandla and INR 8,900/t at Visakhapatnam. Meanwhile, lower-grade 3,400 GAR coal prices advanced by approximately INR 350/t to a nearly 3-year high of INR 6,800/t at Navlakhi, supported by steady demand from sponge iron producers and industrial consumers seeking cost-effective fuel alternatives.
Supply concerns and Indonesian policy uncertainty support sentiment
Market participants attributed the recent uptrend to a combination of global supply-side disruptions and firm seaborne demand. A mine accident in China has heightened procurement activity in the international market, lending support to thermal coal indices. At the same time, rising freight costs have further increased landed prices in India.
Industry sources also indicated that improving sales volumes have encouraged suppliers to progressively raise offers in anticipation of continued buying interest. Additionally, uncertainty surrounding upcoming Indonesian policy changes has prompted sellers to maximise current sales and maintain firm pricing, as the potential impact of the regulations on future supply and export costs remains unclear.
Freight market stable but adds to landed cost pressure
Freight costs continued to lend support to the thermal coal market during the week. Although Supramax freights from East Kalimantan to Navlakhi eased marginally by around $0.4/t w-o-w to approximately $21.6/t, freights remained relatively elevated compared to historical averages. The limited correction was insufficient to offset the impact of firm bunker fuel costs and ongoing vessel availability constraints, resulting in continued support for landed coal prices and replacement costs for importers.
Port inventories increase despite moderate consumption
India’s thermal coal inventories at major ports rose by 2.4% w-o-w to 15.53 mnt in Week 21 from 15.16 mnt in Week 20, supported by fresh cargo arrivals at select western ports. Downstream demand from the sponge iron, steel, and cement sectors remained relatively cautious.
Power plant stocks decline, highlighting distribution challenges
Coal inventories at Indian thermal power plants declined to nearly 49 mnt as of 27 May, equivalent to around 16 days of consumption. Stock availability also remained uneven across regions and plant categories. Approximately 23 thermal power plants continued operating at critical inventory levels, including facilities dependent on domestic coal, imported coal, and washery rejects.
The situation underscores persistent logistical bottlenecks and regional supply imbalances, despite overall national coal stock levels remaining adequate.
Firm global fundamentals continue to underpin market
International thermal coal markets maintained a bullish tone during the week, supported by stronger Asian demand and tightening availability of Indonesian spot cargoes. Benchmark 5,800 GAR coal prices increased by around $2-3/t w-o-w, while 4,200 GAR and 3,400 GAR grades recorded gains of approximately $1-2/t each. The sustained strength in international markets has continued to support higher replacement costs and firm portside pricing in India.
Outlook
BigMint expects portside thermal coal prices to remain elevated in the near term, supported by strong international coal indices, higher freight costs, and uncertainty surrounding Indonesian policy changes. While ample port inventories and cautious buying may cap sharp price increases, elevated replacement costs and limited spot availability are likely to sustain bullish sentiment. Market participants will closely monitor Indonesian regulations, freight trends, and monsoon-related logistical challenges for further price direction.
Leave a Reply