Indonesian thermal coal prices rise amid improved demand from India, China
In Indonesia the availability of spot cargoes remained limited
Indonesian thermal coal prices have shown an upward trend in the past week. Low-CV (3400 GAR) coal prices increased by $0.14/t to $37.37/t, while high-CV (5800 GAR) prices edged up by $1,003/t to $96.17/t.
On the supply side in Indonesia, the fundamentals of supply remained unchanged. However, rain-induced hauling and transportation constraints persisted in East Kalimantan, South Kalimantan, and Sumatra due to heavy rainfall, leading to reduced availability in the spot market. Consequently, spot cargoes were scarcely available, prompting Indonesian producers to offer high prices.
Chinese demand for low-CV coal from the spot market increased, while the domestic price for high-calorific value coal began to fall in China. Buyers also displayed caution regarding freight cost volatility and attempted to reduce FOB prices for high-CV coal by submitting lower bids compared to the previous week. However, bids from Chinese buyers did not match the offers from Indonesian traders. Chinese traders adopted a “wait and watch” policy, expecting high-CV prices to decrease.
Indian demand for Indonesian coal is likely to remain optimistic, given the recent mandate by power ministry requiring all power plants using domestic coal to continue blending 6% international coal with domestic produce until June. Additionally, with the upcoming general election, Indonesian coal demand is expected to increase from the second half of March in India, driven by improved demand from coastal power plants and the cement sector, particularly for high-CV coal.
India: Portside prices increase by INR 200/t
Thermal coal prices for 4200 GAR coal at Kandla Port increased at INR 6,300/t. This uptick in prices can be attributed to improved buying interest.
Outlook
Prices in Indonesia may increase in the coming weeks due to an increase in demand from Chinese buyers for low-CV coal. Furthermore, demand for Indonesian coal from India is anticipated to surge in the latter half of March, primarily from power plants and the cement sector, coinciding with the full onset of summer. However, there could be some supply constraints from Indonesia due to rainfall in Sumatra and other regions of the country. These supply constraints are causing less availability of cargo in the spot market.