With the rising coal crunch at power plants and constrained supply in the non-power sector, portside prices of Indonesian thermal coal bounced back.
As per CoalMint’s assessment, prices of GAR 4200 kcal/kg rose by INR 500/tonne (t) w-o-w to INR 10,200/t at Kandla, while those of GAR 5000 kcal/kg are at INR 12,400/t. Prices exclude cess and GST.
According to market participants, imported coal stock at ports remained under pressure with increasing replenishment by end-users. Meanwhile, tenders issued by imported coal-based power plants also increased sharply with a surge in power demand.
With limited vessel arrival from Indonesia, some traders were also heard offering coal above the landed cost by INR 1,500/t at some southern ports.
As per CoalMint’s vessel line-up data, a total of 0.36 million tonnes (mnt) of Indonesian coal-laden vessels are scheduled to arrive at various Indian ports. Out of this, Tata Power is the highest importer with 0.15 mnt, followed by ArcelorMittal Nippon Steel, Adani Enterprise, and Agarwal Coal with an approximate volume of 0.07 mnt each.
Tight supply at power plants
Amid escalating power demand surrounding the post-pandemic economic recovery and a hotter-than-usual summer, CIL’s daily coal dispatches to power plants continue to remain low.
The miner was supplying coal at a rate of 2.05 mnt/day in February, which inched down marginally to 2 mnt/day in March. These dipped further to 1.9 mnt/day in April.
Furthermore, a series of logistic challenges and lesser rake availability also aggravated the situation for both the power and non-power sectors in the country, despite buyers’ willingness to bid higher prices.
“We are micro-managing the supply situation here at plants as rake allotment for both linkage/FSA and imported coal at ports are under pressure,” a north India-based power producer said.
“Despite having above 100,000 t of Australian coal stock at ports, rake allotment for captive power plants are also taking time,” he added.
Thermal coal stock at power plants were assessed at 21.9 mnt, sufficient for 9 days of consumption as on 21 April 2022, data from the Central Electricity Authority (CEA) showed.
Imported coal sentiment
A sharp rise in domestic coal prices in China once again prompted utilities to seek Indonesian cargo as an accident on the Daqin railway line between Shanxi and the northern port of Qinhuangdao led to a rapid decline in portside stocks.
However, any sharp rise in procurement also remained capped as a few buyers also wait to understand the supply situation as Spring maintenance of railway lines begin from May.
Record coal output in the country this time, however, is likely to limit any major rise in Chinese demand for Indonesian coal, market participants informed.
Meanwhile, tight cargo availability in Indonesia also compelled miners to offer a premium over index prices.
Short-term outlook
Indonesian portside prices are likely to remain higher amid elevated imported prices. Strong coal demand from major buyers is seen keeping imported prices elevated in the near term.
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