While the Indonesian coal price index has moved up by $2/tonne (t) on a weekly basis, trades are happening at a premium of $6-7/t above the index price in China and India. The reason being heavy rainfall in that country that has disrupted the country’s coal production. Many miners are even heard to have declared Force Majeure due to heavy rainfall in key mining areas of South and East Kalimantan.
“A Panamax vessel deal for 3,800 GAR coal has been concluded at $83/t, CNF China basis for October delivery,” informed a trader based in China. The freight between Indonesia and China is assessed at $15/t.
Indonesian thermal coal index prices
| Grade | Sept’21 W1 | Sept’21 W2 | w-o-w change |
| 3400 GAR | 44.35 | 45.72 | 1.37 |
| 4200 GAR | 74.98 | 76.68 | 1.70 |
| 5000 GAR | 108.85 | 110.12 | 1.27 |
| 5800 GAR | 125.90 | 127.97 | 2.07 |
| 6500 GAR | 137.50 | 139.68 | 2.18 |
Prices in $/t
Low Indonesian cargo availability worry Chinese utilities
Amid a strong coal restocking demand in China ahead of winter, lower spot cargo availability from Indonesia is weighing on the buying sentiments of Chinese utilities.
After experiencing a supply deficit situation since late last year, Chinese power utilities had begun booking coal for winter from August, one month prior to the usual procurement month.
As on 9 Sept’21, coal stockpiles at Qinhuangdao Port were at 3.52 mn t, heading to the previous multi-year low of 3.46 mn t on Jul’21. Subsequently, Chinese domestic thermal prices for 5500 NAR have also moved higher to RMB 1,200/t ($185/t) against the price of RMB 1,150/t towards August-end.
Indian buyers remain on the sidelines
Owing to the elevated Indonesian coal prices, demand from India especially for high-CV coal remained far and between.
“From using imported coal entirely, earlier, our blending ratio has now reduced significantly due to higher imported coal prices. Despite incurring losses, we have to run our operation,” a screening plant owner said.
Meanwhile, weak coal inventory levels at power plants continue to keep the coal supply situation at a ‘super critical’ level. As on 10 Sept’21, coal stocks were at 11.08 mn t (sufficient for only 6 days of use) compared to 11.74 mn t assessed on 5 Sept’21.
Amidst low availability, portside offers of 4,200 GAR coal in Kandla were at INR 7,200/t, while offers for 5,000 GAR in Kandla were at INR 8,350/t, in case of advance payments (prices exclude cess and GST).
Outlook
CoalMint believes, Indonesian coal prices are likely to remain elevated in the near-term amid lower number of vessels being discharged from Indonesia due to floods and Force Majeure at mines.
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