Portside prices of Indonesian 4200 GAR have risen by INR 2,000/tonne (t) within a month’s time at Kandla Port. These are currently assessed at INR 9,000/t (excluding cess and GST), while offers have risen to INR 10,000/t. This trend has emerged amidst an acute domestic coal crunch and a sharp rise in imported prices.
In the last two weeks of September, Indonesian imported coal prices shot up by $33/t amid robust buying from China and supply constraints in Indonesia due to heavy rains.
This made portside prices in September shoot up. However, despite the sharp increase in prices, end-users procured Indonesian coal but in smaller quantities.
“Imported prices started rising from Jun’21. Since then, Indian buyers delayed restocking and relied more on domestic coal as it was available then . Now that there is a domestic supply crunch since August-end, there is panic-buying for Indonesian coal from ports even at elevated prices,” said a Chennai-based trader. Premiums on imported coal of various grades are heard in the range of $5-6/t.
Amid lower number of vessels coming from Indonesia to Indian ports, availability of 5000 GAR remained limited at Kanlda, sources said.
Coal stockpile at Indian power plants continued to remain at a critical level, moving down to 8.01 million tonnes (mn t) as on 30 Sept’21 which are sufficient to tide over only four days of usage, as per data from the Central Electricity Authority (CEA).
Amidst the crisis, Coal India Limited (CIL) and its subsidiaries have been prioritising 95% of coal rake allotment to the power sector. However, utilities depending upon imported coal remain under pressure due to sky-high Indonesian coal prices.
Indonesian thermal coal index prices
| Grade | Sept’21 W4 | As on 1 Oct’21 | w-o-w change |
| 3400 GAR | 50.20 | 55.71 | 5.51 |
| 4200 GAR | 91.28 | 107.96 | 16.68 |
| 5000 GAR | 132.66 | 150.5 | 17.84 |
| 5800 GAR | 150.72 | 166.11 | 15.39 |
| 6500 GAR | 160.5 | 179.44 | 18.94 |
Prices in $/t
China’s coal crisis worsens
Amidst the severe domestic coal supply crunch in China, traders in this country last week stocked up on coal bookings before going into a week-long Golden Week holiday from 1-7 Oct’21.
Several Chinese provinces have been implementing power cuts after they missed the central energy consumption targets, while some are facing a shortfall in electricity.
Meanwhile, cargo shortage and heavy rainfall continued to disrupt shipments from Indonesia. China’s robust downstream demand for Indonesian coal, and Indonesian miners struggling to meet their Domestic Market Obligations (DMOs) together kept Indonesian coal prices elevated.
Outlook
CoalMint believes, portside thermal coal prices will remain elevated up to mid-October till domestic coal supplies improve in China.
On the other hand, imported Indonesian coal prices are likely to trade at higher levels amidst China’s robust downstream demand, thanks to its severe coal shortage.
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