Indonesian thermal coal prices continue to decline amid weak buying appetite from China and India. Rising domestic output in both the countries compelled traders to avoid making any major purchases.
Imported prices for Indonesian coal across grades have come down by $3-6/t w-o-w this week. The price for 6500 GAR grade coal is currently assessed at $242/t whereas that for 4200 GAR is at $87/t FOB. The freight for supramax vessel between India and Indonesia is assessed at $18/t.
Strict Covid lockdown and falling domestic coal prices in China have lowered demand for seaborne bookings. Power plants have sufficient inventories for the upcoming two months. Market participants expect that Chinese demand may remain subdued given their record-coal output this year and long-term benchmark 5500 kcal/kg NAR coal prices fixed at RMB 675/t ($93) for 2023.
Meanwhile, increased coal output in India has also kept thermal coal import demand weak as Indian buyers await price clarity. Indian domestic coal production has risen by 12% y-o-y in January-October 2022.
“There are huge coal stockpiles accumulated at ports, while stock and sale activity are a bit sluggish. Daily dispatches have declined by 30% since September 2022 at the western coast as industries are waiting for prices to correct further,” a west-India based trader said.
Several industries including ceramic, chemical, and fertilisers are heard to have increased their capacity utilisation. However, the pace of bookings remains weak given the declining trend of Indonesian coal prices.
Weak European demand
Indonesian high-CV prices are also on a declining trajectory amid weak demand from European countries as they have sufficient inventories for the winter season.
Falling coal prices have prompted few Indonesian miners to focus on domestic obligation and hold back export offers on expectations of increasing demand during the peak winter season. Shipments to the Netherlands and Italy fell over 50% each to 0.08 mnt and 0.13 mnt respectively in October 2022, as per CoalMint data.
Short-term outlook
Indonesian coal prices are expected to remain under pressure in the upcoming week amid weak procurement demand from Asia and Europe.
Leave a Reply