Sustained demand from both China and India has kept Indonesian coal prices moving upwards, as bad weather hit supply from Kalimantan.
Indonesian coal offers were anticipated to rise in Dec’17, since buying expectation from China was to increase for winter restocking.
However, the peak monsoon rains are posing challenges to coal production in Indonesia, thereby supplying additional support to the rising prices. On the other hand, enquiries from Indian buyers were also high as they look to build stockpiles at the power plants.
Indonesian 5000 GAR coal was offered at USD 65-66/MT, FoB Kalimantan. 4200 GAR coal was offered for USD 46-47/MT, FoB Kalimantan.
Market participants have informed that Indonesian miners have limited supply to cover the increased demand for December shipments. As a result, the coal prices are likely to remain firm until Chinese buyers restock ahead of the New Year holidays, only after which prices would start falling.
Indian Market Scenario:
Indian buyers had showed great appetite for Indonesian coal, on the back drop of declining coal stock at power plants. However, the recent steps taken by CIL to prioritise coal supply to power plants had seen stockpiles growing at the plants.
As per the data provided by Power Ministry, total coal stock available at Indian power plants has rose to 11.8 MnT as on 11 Dec’17, sufficient for 8 days of power generation.
An Indian trader had commented that aggressive buying from China generally affects Indian buying during Dec-Jan period, with Indian buyers have started to track index prices before making a move, it is likely that the market activity will slow down.
Indonesian coal index prices have been climbing up since the beginning of Dec’17, particularly ICI-4 (4200 GAR coal) price have gone up USD 1/MT during the period. ICI-4 was assessed at USD 45.38/MT on 8 Dec’17.
Indonesian 4200 GAR coal offers for Indian buyers were assessed at USD 55-56/MT, CFR India. 3800 GAR coal was offered at USD 46-47/MT, CFR India.
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