Indonesian coal price has continued its upward trend, as China continue to source coal to meet its summer demand amid high temperatures. Besides, rain in Indonesia has also limited spot availability of coal, adding support to the prices.
Indonesian 4200 GAR coal price was assessed at USD 49/MT, FoB Kalimantan, while offers for 3800 GAR coal was heard at USD 38-39/MT on FoB basis.
However, in spite of the healthy demand for summer season in China, market participants were expecting a correction in Indonesian coal prices in the wake of the Chinese government’s effort to reverse the bullish trend.
Last month, the Chinese NDRC had floated a series of measures to stabilise the domestic coal prices, in which the power utilities were also asked not to stock coal for more than 15 days.
Given the rising temperature, it would be nearly impossible for the Chinese buyers to halt their coal imports, but market participants are anticipating that the proposed reform would certainly have an effect on the country’s coal buying trend.
According to the data provided by China’s statistical bureau, heat waves across the country and a strong growth in power consumption had resulted in a 10% increase in coal-fired electricity generation in May’18. However, to combat the rising power demand the country has attained its highest coal production since Dec’17.
Chinese coal production was marked 3.5% higher on the year, at 269.99 MnT in May’18. The continual in domestic coal production would certainly ease the appetite for imported coal.
Indonesian coal buying from India has also begin to slow down, as most of the buyers have already stocked coal before the rainy season, while only need based buying were seen among them.
On the other hand, as a result of the combined effort of CIL and Railways, coal stock at the power plants has increased to 15.205 MnT as on 12 Jun’18, which was assessed at 14.819 MnT as on 31 May’18. The rise in coal stock is likely to lower the import demand from the power sector.
Indonesian 4200 GAR coal was assessed at USD 61-62/MT on CFR basis.
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