Prices for Indonesian coal with calorific value 4200 GAR are seen rising as Chinese buyers are expected to return from Chinese new year break, while rains in coal-producing provinces in Kalimantan have hampered production and shipment.
Indonesian 4200 GAR is offered at USD 50-51/MT, FoB Kalimantan or Sumatra, according to three sources interviewed by Coalmint.
“We’re still waiting for China. China hasn’t woken up from the Chinese new year,” said Ramli Ahmad, a fossil fuel specialist at PT Kawarna Energi Corpindo and one of the sources being interviewed. Chinese demand is still robust that some Indian traders sell Indonesian coal to China, Ahmad added.
China’s efforts to slash over-capacity and streamline its domestic coal industry has been supporting demand for imported coal and pushing prices up in the past two years to USD 100.
The cold snap that is sweeping Asia, including China, has been further fuelling coal demand for heating in homes and industries. Some power plants have switched back to coal from gas or other energy. China coal imports rose to their highest level in four years at 27.81 MnT, Reuters reported on 8 Feb’18.
In February, Indonesia increased coal benchmark price to USD 100.69, from USD 95.54/MT in Jan’18, partly due to China’s winter consumption.
While demand climbs, rains in Indonesia’s coal-producing provinces in Kalimantan has slowed production and hampered loading of vessels as well as shipment.
“It’s already March and it’s still raining. So, a supply of 4200 GAR coal is tight now. It’s difficult to get cargoes for spot term” with many buyers have locked in long-deliveries, said Ahmad of Kawarna. “It’s a mix of weather that affects production and then affects everything,” he added.
West monsoon that brings rain and high tides are expected in West Kalimantan, northern part of Central Kalimantan, and Central Sulawesi this week, the Indonesian Meteorology, Climatology and Geophysics (BMKG) said on its website.
Medium to high intensity rains are expected this week in the following coal-producing areas: West and South Sumatra; Bengkulu and Jambi in Sumatra island; Central Kalimantan, North Kalimantan, West Kalimantan, South Kalimantan and East Kalimantan, according the weather agency.
Strong winds are also forecast to cause high tides in, among other in the Andaman sea, Malacca Strait, and in Sulawesi sea.
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