Indonesian thermal coal prices range-bound as Chinese buyers wait and watch

Indonesian thermal coal prices remained in a tight range this week as Chinese traders stepped back from purchasing.

This wait-and-watch stance comes as domestic coal prices in China corrected following the government’s intervention to bring down the same to within a reasonable range.

The government has mandated a price ceiling for portside sales at under RMB 900/t ($142/t) and for pithead transactions at less than RMB 700/t ($111/t).

Coal stockpiles at Chinese power plants have also increased , limiting buying interest in imported coal as the China State Railway Corporation last week delivered more than 91,000 wagons of coal to power plants – a record volume. Stock at the country’s 363 power plants reached 64.34 million tonnes (mnt), up 53% y-o-y.

A sharp fall in Indonesian coal prices, however, was limited as miners continued to clear backlogs and focused on meeting their domestic market obligations (DMOs), while factors like heavy rainfall and a slower pace of discharge from ports also supported prices.

Indian sentiment tepid

A price fall in China has again prompted Indian buyers to step back from making Indonesian coal purchases. They are awaiting further corrections, traders said.

Several end-users were also seen making small-parcel trade deals in anticipation of a fall in portside prices,

Portside Indonesian 5000 GAR were assessed at INR 13,000/t, while 4200 GAR are at INR 9,700/t at Kandla Port. Prices exclude cess and GST.

Inventory of 4200 GAR coal were limited and is expected to rise with shipments from Indonesia increasing. A total of 2.1 mnt will arrive at various Indian ports till 11 Mar’22, CoalMint’s vessel line-up data reveals.

With the arrival of new vessels from Indonesia, several power producers were also seen securing bookings, market participants said.

Power plants, last year, had largely stayed away from booking coal due to record-high prices. However, they are now focusing on building stock ahead of the summer season.

Short-term outlook

Portside Indonesian coal prices are likely to remain in a tight range in the coming week as the pace of supply from the country gradually recovers. However, Indonesian prices are also seen taking cues from Chinese and European demand.