The Indonesian Coal Index (ICI) for high-calorific value (CV) coal registered an increase of $1.2/tonne (t) for 6,500 GAR and $1.8/t for 5,800 GAR as the same are currently assessed at $96.2/t and $87.8/t, FoB basis.
Heavy rains in Kalimantan provinces continued to disrupt production and coal transportation, further tightening the limited Indonesian coal supply in the market and impacting its prices. As per market sources, a tailings dam failure occurred at one of the mines in Berau Regency in East Kalimantan following heavy rains, worsening the floods in that area and impacting 50% of daily operations of the mines in nearby locations.
China adopts wait-and-watch policy
Amidst surging Indonesian thermal coal prices since the past few weeks, escalated freights and stable downstream demand, Chinese buyers of Indonesian coal took a step back last week with lesser bids being heard in the market against previous week, market participants informed.
Also, the most actively traded September futures contract prices on China’s Zhengzhou Commodities Exchange made a marginal correction this week following China’s state council meeting held on May 19 by Premier Li Keqiang where he addressed the issue of the high commodity prices in the market. The council urged domestic producers to boost output and stabilise prices before the summer peak demand.
Weak demand rules Indian markets, tight supply supports prices
While, demand from sectors such as power, textile, chemicals, and cement remained under pressure due to lower sales volumes and reduced capacity utilisation, depleting stocks at ports, prevented a sharp fall in portside prices.
The escalated freight rates, along with lower availability of vessels willing to come to India amid Covid restrictions and Force Majeure at ports have been impacting the arrival of imported vessels.
Portside prices for 4,200 GAR grade thermal coal have been assessed at INR 5,200/t ex-Kandla, and for 5,000 GAR at INR 6,500/t ex-Kandla.
Although, offers on 22 May’21 for both the grades have been heard at INR 5,600/t and INR 7,000/t.
What lies ahead?
Amid no concrete measures to boost China’s domestic coal production and absence of Australian coal imports, Chinese coal demand is expected to remain elevated in the near term. On the supply side, rains in Kalimantan resulting in shipments’ delay for miners would continue to support Indonesian thermal coal prices.
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