Indonesian coal offers have started to tumble as Chinese buying has slowed down due to falling domestic coal prices in the country.
China is making desperate efforts to meet tough air quality standards, for which the Government has decided to reduce industrial activity during winter season. In the wake of low coal consumption, domestic thermal coal prices have declined, making imported Indonesian coal less competitive than the domestic coal.
Moreover, building up of coal stock at ports and the underlying import restriction at ports imposed by government has kept Chinese buyers at bay which have lowered their imports.
Offer for 5000 GAR coal was heard at USD 65-66/MT, FoB Kalimantan. Offer for 4200 GAR coal was USD 45-46/MT, while 3800 GAR coal was offered at USD 36-37, FOB Kalimantan.
However, the sustainability of the falling Indonesian coal prices is not expected to last long, as Chinese plant utilities would eventually return to market for winter restocking and keep prices firm.
Indian Market Scenario:
Indian buyers have also reduces their purchasing of Indonesian coal on account of increased domestic coal supply. CIL has been progressively increasing its coal production giving more emphasis to coal supplies to power plants.
An Indian trader had mentioned that he was expecting further price correction in Indonesian coal prices before making firm bids. Current offer for 5000 GAR coal was assessed at USD 76-77/MT, CFR India. While offers for 4200 GAR coal was heard at USD 55-56/MT, CFR India.