Indonesian Coal Prices Fall on Weaker Buying Interest

Indonesian coal prices has continued its downtrend this week, as buying interest from China had worsened.

China’s ongoing port restrictions and government guidelines to curb pollution had affected the appetite for coal imports. Moreover, falling consumption and relatively high coal stocks at northern ports of China, had also slowed down buying from the country.

Market participants have anticipated that the fall in Indonesian coal prices is expected to persist in November, and the prices will uptick once Chinese buyers begin restocking for winter season.

Offer for 5000 GAR coal was assessed at USD 64-65/MT, FoB Kalimantan this week. 4200 GAR coal was offered at USD 44-45/MT, FoB Kalimantan.

Chinese Government has continuously making efforts to put brakes on soaring domestic coal prices, so as the consumers should opt domestic coal instead of going for imported coal. Recently, China’s National Development and Reform Commission (NDRC) had asked its domestic miners and buyers to enter into term contracts for 2018, in order to ensure supply and maintain stability in coal market.

NDRC has also urged both parties to engage with each other so as to avoid middlemen costs. The planning commission has also underlined the added benefit of entering into contract that the Railways, ports and related logistics would prioritize those buyers having term contracts.

Indian Market Scenario:
In the period of slow buying from China, Indonesian coal prices were supported by India where coal shortages at plant continues. Buying from India restrained Indonesian coal prices to fall further, which had dropped near about USD 1/MT across various grades this week.

An Indian trader had reported that many sugar plant operators had been seeking Indonesian coal for power generation, during lower availability of Bagasse, which is used as a substitute of coal. However, he feared that the continuously declining index prices may limit coal buying as buyers wait for prices to become stable.

Coal Price of 5000 GAR coal was heard at USD 73-74/MT, CFR India. While 4200 GAR and 3800 GAR coal was offered at USD 54-55/MT and USD 45-46/MT, CFR India.