Amid changed trade dynamics, cheaper Russian coal availability, especially in China, Indonesian coal prices continued to remain under pressure for the fourth straight week.
The fall in mid-CV 5800 kcal/kg GAR grade was the most prominent at $5/t w-o-w, while the low-and-high CV grades dipped by $3/t.
Chinese buyers are heard to have booked low-CV Indonesian coal while there is not much interest in high-CV material as it is being supplied domestically and also from Russia.
China’s domestic coal production increased by 11% y-o-y during January-June, 2022 to 2.2 bnt.
This has come as China’s power demand continues to remain subdued this year amid Covid-led restrictions and subsequent slowed industrial activities. In fact, the country’s power generation rose a mere 0.7% y-o-y during January-June to 3.96 trillion kilowatt-hours. Specifically, thermal power generation decreased by 6% y-o-y, and hydropower output rose 29% y-o-y, data from China’s National Burea of Statistics showed.
Indian demand, on the other hand, especially from the power sector, has come down from its peak summer levels while other-coal consuming sectors are experimenting with high-CV Russian coal which is cheaper by $30-40/t FOB against other origin coal.
Coal stock at Indian power plants stood at 28 mnt (as on 17 July, sufficient for 15 days, as per Central Electricity Authority data). This has improved from 9 days’ stock that was maintained during summer.
Despite subdued demand, Indonesian miners are avoiding discounts as offers were fixed at index rates amid the tight coal supply situation due to rains. In a confirmed deal for 4200 GAR material, a Supramax vessel was booked at $85/t FOB for August delivery while high-sulphur 5500 GAR has been booked at $130/t, FOB basis.
Indian portside sentiments
Portside prices
*Price in INR/t. Exclude cess and GST.
With the onset of the monsoon in several parts of the country, portside trading in Indonesian coal remained weak with limited bulk purchases taking place.
“Several ceramic industries in the Morbi region, a major buyer of Indonesian coal, are working at their minimal capacity currently as majority of units would go for temporary shutdown next month. Procurement is largely from the power companies because of their mandate to meet sufficient stock levels,” a western India-based trader said.
Buyers tend to curtail bulk coal bookings during monsoon amid concerns over higher moisture accumulation.
Vessel arrival at Indian ports
As per CoalMint’s vessel line-up data, a total of 1.4 mnt of Indonesian coal is set to arrive at Indian ports between 19-27 July with Adani Enterprise as the highest receiver.
*Qty in mnt
Short-term outlook
Indonesian coal prices are likely to remain range-bound in the near term, amid sluggish demand, especially from China. However, a significant drop is restricted as South Korea and Japan — the two key buyers of Indonesian coal — would continue to procure the same amid their sanctions on Russia.
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