At last, the surge in Indonesian coal prices is expected to come to a halt, with demand from its major consumer China slowing down.
Indonesian coal prices had been rising since late December on account of the restocking demand for winter season in China; and were also supported during the month of January on the back of harsh weather that had kept demand for Indonesian coal firm.
However, with the rise in temperature and the long break in Industrial activities during the Lunar year holidays, electricity demand in China would drop, which would eventually lower the coal demand in the power utilities. Chinese New Year holidays are set to commence from 16 Feb’18.
Demand for coal imports among Chinese buyers’ was also lowered by NDRC’s decision to cap domestic coal prices. During the beginning of Feb’18, the price of thermal coal at China’s benchmark Qinhuangdao port reached 780 Yuan/MT.
In order to limit the surge in domestic coal prices and ensure coal supplies to power plants, Chinese policy-maker NDRC had set a price cap of 750 Yuan/MT on coal deliveries from the port.
Market participants have remained optimistic that the Chinese New year holidays will mark the end of the ongoing rally in Indonesian coal prices. However, they were also critical of the fact that fall in prices would be gradual, and not sudden; as the many buyers have planned to cut short their holidays in order to remain active in the coal market.
Moreover, the adverse weather that had still prose difficulty in Indonesian coal production would also continue to offer support to the prices and keep supply tight.
An Indian trader had commented that the decline in global commodities which had pulled down the South African coal prices earlier this week, would affect the Indonesian coal offers as well.
Currently, Indonesian 4200 GAR coal was assessed at USD 50-51/MT, FoB Kalimantan. 3800 GAR coal was offered at USD 40-41/MT, FoB Kalimantan.
Leave a Reply