Portside prices of Indonesian thermal coal continued their declining trend this week in line with imported prices.
Importing prices are expected to decline further in the coming week that has prompted Indonesian coal-consuming units to curtail procurement as continuing operations at such rates remains unviable.
The decline in imported prices came amid lockdown restrictions in China. Rising domestic coal production made power utilities in the country seek lower bids for Indonesian coal.
With limited stock available, prices of GAR 5000 kcal/kg have eased by INR 500/t w-o-w to INR 12,000/t, at Kandla, while those of 4200 kcal/kg coal are assessed at INR 10,500/t, down by INR 500/t w-o-w at the port. Prices exclude cess and GST.
Low trading activities at ports
Amid elevated coal and gas prices, several end-user companies reduced their capacity utilisation by 50% or have suspended operations.
Procurement by such companies is mainly restricted to small-parcel trading as they fail to take price calls amid the falling trend in imported coal prices over the last three weeks, a Gujarat-based trader said.
Higher stock accumulation at ports, however, continued to exert pressure on traders for domestic sales.
Thermal coal stock at Kandla Port increased to 1.35 mnt during 27-31 March, 2022, up by 50% w-o-w. Coal stock at Navlakhi Port also rose by 22% w-o-w to 1.5 mnt, CoalMint stock report reveals.
Coal stock of Friends Impex rose sharply by 111% w-o-w to 0.36 mnt at Kandla Port, while that of Adani Enterprise’s rose by 18% w-o-w to 0.59 mnt, the data showed.
Tight supply in Indonesia
The fall in Indonesian coal prices is relatively low because of tight supply conditions in the country.
Heavy rainfall at mines weighed on operations, affecting coal loading from mines for three to six days.
Cargo availability also remained tight, compelling miners either to offer premium or hold the offers.
Market participants expect Indonesian coal production to remain further under pressure in the upcoming weeks as mining activities tend to slow down during Ramadan.
Meanwhile, Chinese traders continued to move to the sidelines as rising Russian coal supplies at relatively cheaper rates compelled them to book the latter.
Short-term outlook
Indonesian portside prices are likely to remain under pressure amid weak buying appetite of end-users and higher stock accumulation at ports, as per CoalMint’s assessment.
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