Indonesian thermal coal prices dropped last week. Low-CV (3400 GAR) coal prices decreased by $0.25/t to $37.06/t, while high-CV (5800 GAR) coal prices were down by $0.43/t to $92.41/t.
On the supply side in Indonesia, rains in Sumatra and Kalimantan persistently disrupted production at mines and loadings at many ports. Several miners were unable to make offers as they had to reduce their output by 20%-40% due to the rains. The continuous rainfall led to loading issues in Indonesia, causing some mines to temporarily halt operations. The availability of prompt loading cargoes remained scarce in the market due to multiple factors, ranging from weather-related operational hazards causing delays in delivery to most Indonesian miners being booked until March with long-term contracts.
Pockets of demand before the Lunar New Year holidays and supply disruptions due to rains in Indonesia kept Asian thermal coal market demand fundamentals unchanged. Market participants see fewer signs of demand from China, due to Lunar New Year holidays starting on 10 February, 2024. Chances of demand improving from China in the spot market after they come back from the New Year celebrations are very low. This is because the temperature in China is predicted to be higher compared to last year, as projected by the Chinese Environment Department, and most buyers have entered into long-term contracts. Chinese consumption also does not look promising.
On the Indian side, falling prices failed to prompt buyers to take positions due to a lack of demand and surplus domestic thermal coal supplies. Demand for seaborne coal remained weak. Cargoes brought by Indian traders at higher prices were still lying at the ports. Now, the supply for domestic stocks has been addressed by making more railway rakes available.
India: Portside prices largely stable w-o-w
India’s portside prices for 4200 GAR coal at Kandla Port remained largely stable w-ow at INR 6,100/t.
Outlook
Prices of Indonesia’s thermal coal may not increase in the coming weeks due to tepid demand. Demand from Indian buyers has continued to remain subdued due to available stock at ports and high domestic production. The chances of demand improving from China in the spot market after their return from the Lunar New Year celebrations are very low. This is because the temperature in China is predicted to be higher compared to last year, as projected by the Chinese Environment Department.