Indonesian Coal Offers Set on Low Side

A sharp fall in Indonesian coal demand coupled with country’s current economic growth and weather state have affected Indonesian coal prices.

Indonesian 4200 GAR coal mostly shipped to India and China is being traded at USD 26-26.5/MT, FoB. But recently, it is heard that a deal for Supramax vessel of 4200 GAR was closed at USD 27/MT, FoB for Jan’15 first week loading. More or less the grade has been traded at USD 31-32/MT, CFR Indian ports.

However, Indonesian coal market is stable as Indonesian coal prices are declining amid cheaper alternative provided by South Africa.

[su_pullquote align=”right”]A trader mentioned, “We are receiving inquiries from India for 4200 GAR coal but heavy negotiation from buyers are not seems workable for contract. Moreover, Indian buyers are showing less interest on high GCV Indonesian material as they prefer South African and Australian grades.”[/su_pullquote]

A Supramax vessel of 4200 GAR is being offered at Hazira Port at USD 31-32/MT, CFR for Jan’15 deliveries. Meanwhile, high GCV material 5000 GAR is traded at USD 44-45/MT, CIF India for Jan’15 deliveries.

On the other side, Indonesian coal production has been hampered by heavy rains across Kalimantan. Miners and traders had received some inquiries for 4200 GAR coal from China and India, but lack of cargo availability at the time had affected the deal.

Stock and sell at ports

Stock and sell offers have fallen at ports.
• 4200 GAR imported material is offered at INR 2,800-2,850/MT (all duties and clearance included, VAT & CST will be added further) at Hazira Port.

• Indonesian 5000 GAR is available at INR 3,650/MT and INR 3,800/MT loaded on truck at Kandla and Magdalla Port respectively. Currently, few traders are offering old martial comparatively at lower price at few west coast ports.

• Indonesian low GCV 3800 GAR is being traded at Kandla Port at INR 2,600/MT. About 25,000 MT material is currently available at the port on given price.

Indonesian coal production, export and domestic market obligation

Continuously falling Indonesian coal prices, supply glut and weaker global demand amid sluggish economic growth have forced miners to cut their production largely. Due to this, now it seems impossible for the country to achieve its coal production, which is marked about 425 MnT in 2015. However, Indonesian coal miners have cut production by an estimated 20%.

Quantity in MnT
Source: Ministry of Energy and Mineral Resources

Indonesian coal production, export and consumption

Indonesia’s Energy and Mineral Resources Ministry has reported a downfall in coal production in first 3 months of 2015. The total output for 1st quarter of the year recorded at 97 MnT; has fallen by over 20% from 124 MnT in 2014.

Quantity in MnT
Source: Ministry of Energy and Mineral Resources

Vessel freight rate

The freight of shipping coal in Panamax vessel from Indonesia to India is assessed at USD 6-7 /MT. Freight has fallen in last one month and is currently in the range of USD 5-9/MT for all size of bulk vessels. In the current scenario, falling crude oil prices, which declined to USD 31/barrel today, may further drive freight prices in near-term.