*Supply constraints ease due to end of rainy season
*Soft demand in key importing geographies
Indonesian thermal coal prices dropped towards last week. Prices of low-CV (3400 GAR) coal decreased by $0.20/tonne (t), reaching $34.67/t, while high-CV (5800 GAR) coal fell by $0.94/t, settling at $89/t.
On the supply side in Indonesia, constraints in parts of the country are easing due to reduced rainfall and the end of the rainy season. Indonesian miners were on Ramadan holidays, which led to a temporary slowdown in production. Some Indonesian producers are also attempting to liquidate cargoes, particularly those with a mid-level calorific value, at prices favourable to buyers because they anticipate further price drops in the coming months.
Overall, demand remains subdued as major consuming countries rely on ample domestic stocks. Chinese domestic coal prices continue to impact demand fundamentals in the Asian thermal coal market. Chinese power plants, with available coal reserves, have canceled tenders, further exacerbating expectations of declining prices. China had booked many cargoes under term contracts, resulting in healthier existing inventories this year. Some supply issues in China have arisen due to ongoing maintenance on the Daqin railways, affecting price sentiments but without a significant overall impact.
On the demand side in India, coal stockpiles at Indian power plants have been slightly decreasing day by day. Some inquiries from Indian power plants regarding Indonesian thermal coal have mostly focused on Indonesian 4,200 kcal/kg GAR. Most buyers are taking a wait-and-see approach amid market volatility.
India: Portside prices remain stable
Thermal coal prices for 4200 GAR coal at Kandla Port have remained stable at INR 6,200/tonnes. These stable prices can be attributed to subdued demand.
Outlook
Prices in Indonesia are anticipated to decline due to subdued demand from major importing countries such as India and China. China is opting for domestic coal because its prices are lower than those in Indonesia, while demand from India remains low. Some Indonesian miners are extending their Ramadan holidays to halt production, aiming to prevent further price declines in a market already experiencing a demand shortfall.