Indonesian coal prices have continued its steady growth this week, driven by the healthy demand from China. Besides, various constraints had also affected coal supply from the country.
Coal prices have gained momentum ever since the return of Chinese buying into the mainstay.
Chinese buyers had limited their spot purchasing from Indonesia after meeting their coal demand for the winter season. As a result, monthly average coal price of 4200 GAR had fell to USD 41.95/MT in Apr’18, as per CoalMint’s price assessment.
However, the rising temperature across the country has again increased Chinese appetite for Indonesian coal, as offers for 4200 GAR have now reached USD 46-47/MT, FoB Kalimantan this week, whereas offer for 3800 GAR coal were heard at USD 37/MT, on FoB basis.
Market participants had informed that Chinese buyers were largely active in the Indonesian low CV market, while reports of supply constraints were also heard across the country.
An Indian trader had reported that local unrest at Samarinda port in East Kalimantan had an effect on vessel loading, which was expected to stretch further this week. He added that Indonesian coal output was already been hit by bad weather and miners were finding it difficult to ramp up their production schedule.
Another trader had informed that labor strike activity at MHU (Multi Harapan Utama) coal mine had affected supply of Indonesian high CV 5000 GAR coal.
Indonesian 5000 GAR coal was offered at a premium of USD 1-2/MT to the coal index, at USD 66-67/MT, FoB Kalimantan.
The current rally in Indonesian coal prices is likely to continue further with the commencement of Ramadan festival, when production is expected to slow, limiting spot availability.
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