Indonesian thermal coal prices have changed but slightly over the last week. Low-CV coal prices have increased by $1 to $55/t FOB, while high-CV coal prices have dropped by $2 to $120/t FOB.
Prices are stable ahead of the tariff on coal imports by China to kick in from 1 April, 2023. Most buyers are cautious about procurement and prefer to stand on the sidelines for clearer clues on the evolving price scenario. Chinese mills are preferring weaker grade Indonesian coal for blending due to comparatively low prices compared to Australian coal.
Hence demand from China has remained sluggish, while European demand remains largely stable with the softening of fuel prices. Russia’s move to cut gas supplies to Europe has led to increased investments in clean energy.
Demand from South Korea is muted as buyers are seeking alternative options. Indonesian low-grade coal is cost-competitive for South Korean buyers. Plus, geographical proximity reduces shipment costs of imports from Indonesia compared with Australian cargoes.
India recently imposed a law mandating coal-based power plants to run at full capacity. The power ministry, on 20 February, asked Indian imported coal-based power plants to ramp up power generation to full capacity from 16 March for the next three months. This, in turn, will enhance Indian demand for imports.
India: Portside prices remain stable
Thermal coal prices of 4200 GAR coal at Kandla port have been largely stable m-o-m at INR 8,400/t.
Indonesian thermal coal exports increased by 15% m-o-m to 28.14 million tonnes (mnt) in February as against 24.42 mnt in January, CoalMint data show. Indonesian shipments to India stood at 8.1 mnt in February, up 60% m-o-m.
Outlook
Indonesian thermal coal prices are expected to remain stable till China resumes buying after tariff imposition. Also, with coal-based plants in India beginning to run at full capacity post 16 March, shipments from Indonesia may increase further, thereby supporting prices.
Leave a Reply