Weak coal demand dragged Indonesian FoB prices down again this week, although market participants reported an increase in enquiries for 3800 GAR coal from Chinese Traders.
Growing interest from Chinese traders was supported by recent tenders floated by the Chinese Utilities.
While this could have supported Indonesian coal prices, however a wide gap between the bid price and price being offered by suppliers continued to dampen spot market.
Prices for 5000 GAR decline to USD 57-58/MT, FoB Kalimantan. 4200 GAR was assessed at USD 37/MT, FoB Kalimantan while Low CV 3800 GAR was assessed at USD 32-33/MT, FoB Kalimantan.
Reason for Falling Demand from Chinese Buyers:
Chinese thermal coal prices continued their downfall, leading Chinese buyer to consider restricting coal imports and utilise domestic coal.
Spot prices for Chinese 5500 NAR thermal coal, FoB Qinhuangdao dropped below 600 Yuan /MT to 599.42 Yuan/MT, down by 14.08 Yuan/MT on the week. In terms of US Dollar, prices fell by USD 2.04/MT to USD 86.67/MT.
Also, increased hydropower output has been the reason behind weak coal demand from power plants. Combined coal stock held by China’s six key power generators increased by 7% W-o-W.
Based on current consumption rate this coal stock would be enough to run the plants for approximately 19 days.
Indian Market Scenario:
Demand from India is expected to slow down as most of the monsoon purchases had already been completed and other buyers are not too keen on taking June-loading shipments.
CFR Price for 5000 GAR coal was assessed at USD 64-65/MT in East Coast India. 4200 GAR coal was quoted at USD 44-45/MT, CFR East Coast and 3800 GAR at USD 39-40/MT, CFR East Coast India.
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