Portside prices of Indonesian coal at Indian ports rose further this week as the Indonesian thermal coal index continued to rally by $6-15/t across various grades.
This, coupled with the domestic coal supply crunch, supported the rising trajectory of portside Indonesian coal prices as CIL and its subsidiaries continued to prioritise supplies to power plants.
Portside prices of the Indonesian 5000 GAR are assessed at INR 14,500/tonne (t), up by INR 1,000/t w-o-w while the 4200 GAR rose by INR 500/t w-o-w to INR 12,000/t in Kandla. Prices exclude cess and GST.
Old stock of Indonesian coal, however, are also being offered at various Indian ports with a relatively cheaper price by INR 500-1,000/t this week, informed market participants.
Majority of the coal-consuming units, excluding power plants, have been procuring Indonesian coal at higher prices from ports, but mostly limited their purchases to small quantities amid price uncertainty.
The domestic coal shortage and reducing stock at ports made Indian buyers opt for the Indonesian material even at high premiums of $10/t over the index prices.
Coal stockpiles at Indian power plants continued to remain at a critical state at 8.06 million tonnes (mn t) as on 23 Oct’21 which are sufficient to tide over only four days of usage, as per data from the Central Electricity Authority (CEA).
According to CoalMint’s vessel line-up data, 1 mn t of thermal coal is arriving from Indonesia till 16 Nov’21, while 1.6 mn t had landed during the same period last month.
What led to rise in Indonesian coal prices?
Prevailing tight cargo availability in Indonesia, supply constraints in Russia (another key coal supplier to China), and expectation of strong demand from China during winter amid the prevailing domestic coal crunch supported Indonesian prices this week also.
“The spot cargoes from Indonesia are booked till December and there is hardly any material available in the market which is supporting prices. This, despite Chinese buyers adopting a wait-and-watch mode since the last week, after the government intervention,” said a trader based in Indonesia.
As on 22 Oct’21, thermal coal stocks at four key Chinese ports of Qinhuangdao, Caofeidian, Jingtang and Huanghua totalled 15.7 mn t, a drop of 3% w-o-w and by 11% on a y-o-y basis.
Indonesian Coal Index (non-coking) prices
| Grade | Oct’21 W2 | As on 22 Oct’21 | w-o-w change |
| 3400 GAR | 72.69 | 79.13 | +6.4 |
| 4200 GAR | 143.14 | 154.61 | +11.5 |
| 5000 GAR | 197.04 | 210.36 | +13.3 |
| 5800 GAR | 201.98 | 216.60 | +14.6 |
| 6500 GAR | 219.24 | 224.11 | +4.9 |
Prices in $/t
Indonesian coal output to fall in 2021
According to Indonesia’s Energy Ministry, the country’s coal production in CY’21 is likely to fall by 2.4% to 610 mn t as against the planned 625 mn t. Production remained hampered mainly due to the heavy rainfall and higher Covid-19 cases since the last few months.
The country has fulfilled 72% of its annual coal output target by producing 457 mn t during Jan-Sept’21, which is 9% higher than 420 mn t last year.
Outlook
CoalMint believes, portside thermal coal prices will remain elevated till domestic coal supplies improve in India.
Imported Indonesian prices are also likely to be traded at higher levels as the winter season begins in China with a persisting coal supply crunch.
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