India: Increased thermal coal vessels from Indonesia may limit sharp rise in portside prices

With the Indonesian miners actively fulfilling old contracts, thermal coal shipments from this country to Indian ports are seen picking up with a total of 1.2 million tonnes (mnt) slated to arrive by early-Mar’22, CoalMint’s vessel line-up data reveals.

However, the increase in vessel arrivals is expected to keep portside Indonesian prices in a tight range due to limited buying appetite of the end-users.

Owing to the rise in imported prices, portside Indonesian 4200 GAR are already trading higher by 15% m-o-m to INR 9,500/t at Kandla Port, while the 5000 GAR are at INR 13,200/t, up 20% m-o-m. Prices exclude cess and GST.

According to market participants, manufacturing units across the western coast have been procuring coal in small parcels amid the non-viability of running operations at these higher raw material prices.

As a result, portside trading activity has reduced from a high of 15,000 t/per day of volumes to a mere 5,000-7,000 t/day currently.

Indian importers were also heard delaying any renewed bookings of Indonesian coal currently as miners continue to seek $3-4/t premium over the index prices.

Chinese traders in wait-and-watch mode

Following the Chinese government’s intervention to keep coal prices in a reasonable range, traders from this country stepped back from booking any major shipments from Indonesia last week.

China’s top economic planner issued warnings to companies that were charging higher prices, asking them to make rectifications.

“Domestic coal prices in the country are likely to decline further in the next few days and till then Chinese traders would delay taking any positions in the overseas market,” an Indonesian trader informed.

Heavy rainfall and a slower pace of discharge from Indonesian ports also continued to keep supply tight from here.

Demand, however, remained strong with rising inquiries from Europe amid the LNG supply shortage surrounding Russia’s political tensions with Ukraine.

Short-term outlook

Portside Indonesian coal prices are likely to remain in a tight range in the coming week as the pace of supply from the country gradually recovers. However, Indonesian prices are seen taking cues from Chinese and European demand.