Portside trading of Indonesian coal continued to strengthen as the import prices, which have largely remained stable for the last three weeks, catalysed end-users to make more portside bookings before the monsoon begins.
Expectations of higher prices in the coming weeks due to easing of lockdown restrictions in China also compelled them to secure supplies, traders informed.
As per CoalMint’s assessment, portside trade in GAR 4200 kcal/kg were being concluded at INR 10,300/t at Kandla Port, while those of GAR 5000 kcal/kg were at INR 13,000/t. Prices exclude cess and GST.
“There is a huge scramble for coal in the western ports as buyers are unwilling to risk losing these stable prices next week. Power, cement, ceramics, and other allied industries are buying in moderate quantities as 50% of the stocks are getting sold as soon as the vessels are unloading,” a western-India based trader said.
Procurement from the power sector remains upbeat as the government mandated state-owned power plants to place import orders by May-end. It has also allowed them to use coal blended with up to 30% imported content till March next year.
Coal stock at Indian power plants stood at 20 mnt (as on 20 May), sufficient for 8 days, data from the Central Electricity Authority (CEA) revealed.
Strong import demand
The Centre has invoked Section 11 of the Electricity Act, 2003 and asked all imported coal-based power units to run at full capacity.
With the ongoing coal supply shortage in the country, and expectation of further crunch in the upcoming weeks, Indian buyers continued to make low-CV Indonesian coal bookings.
As per CoalMint vessel line-up data, a total of 1.1 mnt of Indonesian coal-laden cargoes are set to arrive at Indian ports between 23 May and 9 June.
Out of this, 0.5 mnt is set to arrive for end-users such as Semb Corp Gayathri Power, JSW Mineral, etc, while the balance 0.6 mnt is set to arrive for trading firms such as Agarwal Coal.
Subsequently, Indian traders are heard to be booking Indonesian coal at a premium of $2.5-3/t for the branded variety, while the non-branded ones are being booked at index-rates as coal demand rises sharply in the country with increasing temperature.
Chinese procurement demand, on the other hand, remained weak last week amid rising coal imports from Russia surrounding heavy discounts offered by miners.
Short-term outlook
Stable imported coal rates are likely to keep Indonesian portside prices firm in India. However, there is the prospect of a rise if easing lockdown restrictions in China prompt traders there to float inquiries for low CV Indonesian coal.
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