Portside trading activity of Indonesian coal remained largely restricted to small parcels over the last few weeks as weak domestic demand and the onset of the monsoon season compelled buyers to avoid taking any major bets.
Procurement remained in the range between 300-2,000 t, relatively on the weaker side as domestic market conditions remained sluggish following the sharp fall in steel prices, a west India-based trader said.
As per CoalMint assessment, portside prices have remained in a tight range mirroring import prices as 4200 GAR kcal/kg prices were at INR 9,800/t at Kandla Port, while those of 5000 GAR kcal/kg were at INR 12,600/t. Prices exclude cess and GST.
The absence of Chinese traders from the global market continued to keep Indonesian prices stable. However, rising domestic coal prices in the country also reinforced a pick-up in inquiries this week.
The prevalent prices of Indonesian coal have regained a price advantage following the improvement in China’s domestic coal market sentiments with the easing lockdown restrictions in the country.
Higher domestic coal prices, logistic woes continue
The non-power sector continues to face concerns over elevated domestic coal prices as these rose by a whopping 400% premium in recent weeks.
In the latest auction of Eastern Coalfields Ltd (ECL) on 15 June 2022, bids for G4 grade rose to INR 12,469/t against the reserve price of INR 4,100/t, while those for G5 were at INR 8,695/t against the reserve price of INR 3,772/t.
In a bid to increase coal supply to the power plants, rake allotment has largely been directed towards power utilities and independent power plants, leaving the captive power plants to wait long for their cargoes, a trader said.
Coal India raises import purchases
Domestic state-miner Coal India Ltd (CIL) continues to come up with back-to-back tenders to mobilise increased volumes of imported coal as assigned by the government.
The miner has been issuing tenders not only for supply to the power sector but also initiated to keep a ready stock as and when a power plant approaches them.
The tenure for coal supply is for a period of one year starting July 2022 till 30 June 2023. The minimum indent quantity has been fixed at 50,000 tonnes. The last date for bid submission is 5 July 2022.
Short-term outlook
Domestic portside trading activity is likely to remain weak surrounding the upcoming monsoon season as coal-consuming units tend to temporarily halt production. Import demand, however, may remain higher as power plants will secure coal supply amid rising power demand.
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