India: Portside Indonesian coal prices fall INR 4,000/t w-o-w as imported rates drop

After months of sharp increases, portside prices of Indonesian coal at Indian ports corrected downward by more than INR 4,000/tonne (t) this week. This decrease comes as the rally in imported Indonesian thermal coal prices paused after straight seven months.

Portside prices of the Indonesian 5000 GAR are assessed at INR 10,500/t , showing a decline of INR 4,000/t w-o-w while the 4200 GAR fell by INR 2,500/t w-o-w to INR 9,500/t in Kandla. Prices exclude cess and GST.

Majority of the end-user units last week were heard to be avoiding any major purchases in anticipation of a fall in prices. This week too traders expect portside activity to remain muted due to the festive season and amid expectation of a further decline in prices.

Coal stockpiles at Indian power plants improved to 10.09 million tonnes (mn t) as on 29 Oct’21 which are sufficient to tide over only six days of usage, as per data from the Central Electricity Authority (CEA).

According to CoalMint’s vessel line-up data, 1.09 mn t of thermal coal is arriving from Indonesia between 3-12 Nov’21.

Why are Indonesian coal prices falling?

A sharp decline in China’s thermal coal prices in the last two weeks compelled Chinese traders to take a breather and slow down procurement.

China’s thermal coal futures at  the Zhengzhou Commodity Exchange fell to RMB 925/t ($145/t) on Monday from the highs of RMB 1,982/t ($310/t).

The decline came after the Chinese government stepped in to increase domestic coal production by adopting a slew of measures. Supply from the key coal producing region of Inner Mongolia also increased.

“Most of Chinese buyers for major power plant are currently on a ‘wait-and-watch’ mode since NDRC capped its domestic coal prices. Imported coal prices are also following suit. But Indonesian coal prices are unlikely to correct sharply as most suppliers are sold out for November,” an Indonesian trader said.

Indonesian Coal Index (non-coking) prices

Prices in $/t 

Outlook

CoalMint believes, portside thermal coal prices are likely to see a further correction in the upcoming week amid the falling imported prices and improving domestic coal supplies in India.

However, any significant correction in Indonesian coal prices would be limited amid tight domestic supply in this country wherein cargoes have been booked till December. Moreover, rainfall has continued in some parts of the country, delaying deliveries.