- Inquiries from China increase post-Labour Day holidays
- Indonesian producers prioritise domestic sales
Indonesian high-CV thermal coal prices rose last week. Prices of high-CV (5800 GAR) coal increased by $1.70/t, settling at $94.58/t. Indonesian mid-CV coal prices (4200 GAR) increased by $1.09/t to $56.04/t. Meanwhile, prices of low-CV (3400 GAR) coal increased by $0.36/t to $35.13/t. Prices mentioned are on FOB basis.
On the supply side, Indonesian producers continued to emphasise on ensuring domestic supply, with miners focusing on increasing sales to domestic nickel smelters amid rising demand from the sector. Indonesian producers held onto their offer levels, anticipating a revival in demand from China in the near term. Additionally, a recent increase in freight for Supramax cargoes also impacted buying interest. Rising freight rates for Supramax vessels prompted buyers to seek Panamax vessels, which were scarce due to most Indonesian traders having already sold under term contracts.
As temperatures started to rise in the top consuming nations, bids for overseas cargoes were heard to be rising. Bids for Indonesian coal with low calorific value (CV) are rising, which implies that demand is increasing at a faster pace than the rate of domestic production in the top importing countries. Chinese buyers actively sought cargoes after stocks at their ports depleted during the Labour Day holiday period. Inquiries from China increased after Chinese domestic coal prices also began to show an upward trend after the country’s participants resumed work on 6 May 2024 after an almost week-long holiday.
In India, inquiries for low to mid calorific value (CV) Indonesian thermal coal were observed to be emerging from Indian power plants amid scorching heat across the country. According to market participants, the increased supply of domestic coal to the plants limited such inquiries, resulting in a wide gap between offers and bids. However, few traders were heard to be showing interest due to restocking needs before monsoon.
Portside prices stable
Thermal coal prices of 4200 GAR coal at Kandla Port stood at 6,450 INR/tonne (t). This stability can be attributed to the wait-and-watch mode, driven by the disparity between bids and offers.
Outlook
Indonesian prices of thermal coal may increase in the upcoming weeks due to improved demand from China. Depleting stocks at Chinese ports after labour Day holidays, coupled with a rise in domestic coal prices in China, have led to increased inquiries for Indonesian thermal coal. Meanwhile, Indonesian coal prices may also increase in the near term as demand from India’s power sector improves. India is restocking before the onset of the monsoon season, while rising temperatures in top-consuming countries are further boosting demand for Indonesian coal. Consequently, Indonesian prices may rise.