Portside prices of Indonesian coal have risen sharply by INR 2,000-3,500/t w-o-w across various ports in India. The sustained increase was fuelled by the Indonesian thermal coal index prices, which extended their rally further, and the continued domestic coal crunch.
The coal shortage worsened further last week as CIL directed its subsidiaries to refrain from conducting coal auctions, except the special forward auction, which is earmarked only for the power producers, leaving the non-power sector waiting for a long time to get domestic supplies.
Amidst lower inventory, portside prices of the Indonesian 4200 GAR have risen by INR 2,000/tonne (t) (w-o-w) to INR 11,500/t at Kandla, while prices of the 5000 GAR is assessed at INR 13,600/t at the port, up by INR 3,500/t w-o-w. Prices exclude cess and GST.
Majority of the coal-consuming units continued to procure Indonesian coal even at raised offers as availability of domestic supplies remained weak. Traders, on the other hand, continued to set higher prices owing to the depleting coal stock at ports, and lower number of vessels coming from Indonesia currently.
“Imported coal demand is likely to stay strong in India due to the heavy rainfall in several states which would further delay availability of domestic coal for the industrial sector,” a Surat-based trader said.
Market participants are seeking limited coal bookings from Indonesia currently due the uncertainty on whether rising prices would get absorbed by these units next month onwards, if domestic supplies improve slightly.
Indonesian Coal Index (non-coking) prices
| Grade | Oct’21 W1 | As on 15 Oct’21 | w-o-w change |
| 3400 GAR | 64.83 | 72.69 | +8.31 |
| 4200 GAR | 122.08 | 143.14 | +21.06 |
| 5000 GAR | 160.87 | 197.04 | +36.17 |
| 5800 GAR | 18.64 | 201.98 | +13.34 |
| 6500 GAR | 193.06 | 219.24 | +26.18 |
Prices in $/t
The slowdown in coal production in the last two months, due to heavy rains in Indonesia, also led to miners struggling to meet their domestic market obligations, further supporting its prices.
China’s robust demand
With the ongoing power rationing in China amid the acute coal shortage, downstream demand for Indonesian coal from Chinese utilities remained strong.
According to sources, Chinese traders have been heavily booking Indonesian thermal coal of 4200 GAR to 5000 GAR, as evident from the sharp rise in the index of these two grades last week.
Meanwhile, domestic coal prices continued to trade at higher levels, as thermal coal futures on China’s Zhenzhou Commodity Exchange rose more than 10% d-o-d to above 1,800 yuan/t ($280/t)today, hitting a new high.
China’s National Development and Reform Commission called on coal miners and sellers to set the benchmark domestic 5500 NAR thermal coal prices not higher than 1,800 yuan/t ($280/t), 5000 NAR and 4500 no higher than 1,500 yuan/t ($233/t) and 1,200 yuan/t ($187/t), respectively.
Outlook
CoalMint believes, portside thermal coal prices will remain elevated till domestic coal supplies improve in India.
On the other hand, imported Indonesian prices are also likely to trade at higher levels amidst the ongoing heavy rainfall in Indonesia, that is disrupting coal production and logistics, and China’s robust downstream demand ahead of the winter.
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