Indonesian thermal coal prices started picking up from early this week post-a continuous decline for about two months. Low-calorific value (CV) prices are assessed at $56/t FOB, up $4/t w-o-w, while high-CV prices are at $123/t FOB, up $2/t w-o-w.
Prices have picked up amid resumption of buying interest from China and India. The Chinese demand has picked up as buyers return to restock ahead of summer.
The price of 4200 GAR increased to $73/t this week. This was up by about 8% from the 13-month low of $68/t hit in the previous week. This grade is most commonly used by Chinese and Indian buyers due to its comparatively lesser price as against the higher grade supplied by Australia and South Africa.
In recent months, Indian imports of Indonesian coal have been less amid the rush to buy cheaper Russian coal. However, with the approaching summer, Indian utilities may experience an electricity shortfall and may be forced to shift to Indonesian coal.
India recently imposed a law to force coal-based power plants to run at full capacity. The power ministry, on 20 February, asked Indian imported coal-based power plants to ramp up power generation to full capacity from 16 March for the next three months. The decision was arrived at on the expectation that peak power demand will touch 229 gigawatt (GW) in April. The directions are issued under Section-11 of the Electricity Act, 2003. This in turn will enhance Indian domestic demand for imported material.
Indian portside prices up w-o-w
Offers for 3400 GAR coal at Kandla Port were heard at around INR 5,800/t. Prices have shown a slight increase of about INR 100-200/t.
Indonesian thermal coal exports decreased by 10% m-o-m to 24.4 million tonnes (mnt) in January 2023 as against 27.05 mnt in December, CoalMint data show. Indonesian shipments to India stood at 5.07 mnt in January, up 9% m-o-m.
Outlook
Indonesian low CV coal prices are expected to see a continuous rise amid increasing Indian and Chinese demand. However, exports of high CV coal may remain subdued as its major buyers like Japan and South Korea are exiting from peak winter demand.
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