Indonesian thermal coal prices continued to remain largely stable last week despite a sharp rise in other-origin coal prices as demand from its key buyer, China, remained sluggish.
Chinese traders have been on the sidelines amid rising domestic coal output, increasing availability of Russian coal and the recent decline in domestic coal prices, making importing coal from other origin less attractive.
Factors keeping prices stable
European demand for high-CV coal: Despite Europe’s strong import demand, Indonesian exports to the country were limited mainly due to miners inability to export high-CV coal to the country. European buyers procure high-grade coal due to their carbon-emitting norms, while mid to low CV coal has majority share in Indonesian exports which is mainly supplied to the northeast Asian market.
Indonesia focused on domestic market: With the rising demand for coal among Indonesia’s power utilities, miners have been largely focused on fulfilling domestic market obligations and existing customers in Asia, a Kalimantan-based trader said.
Exports to newer origins are likely to rise more only after the monsoon subsides in the country in the next two months.
Indian market sentiment
Demand from India for low-mid-CV coal Indonesian coal continues to remain firm from the power sector amid a domestic coal supply crunch.
According to CEA (Central Electricity Authority), coal stock at 91 out of country’s total 173 thermal power stations are in a critical situation. Of these 91 plants, 8 are non-operational and another 8 are dependent on imported coal. Coal imports have not yet picked up to the extent required to create inventory of half the normative level for the imported coal-based units.
But the pace of bookings from other sectors like brick, cement, chemicals, textiles has slowed down amid inflationary pressure and curb in construction activities with the onset of the monsoon.
Portside trading activity of Indonesian coal continued to remain in a tight range in India as buyers kept to small parcel bookings in the range of 300-2,000 t. Also, power plants are preferring to book imported coal directly rather than buying it on cash and carry basis.
*Price in INR/t. Exclude cess and GST.
As per CoalMint’s vessel line-up data, a total of 1.53 mnt of Indonesian coal is set to arrive at indian ports between 27 Jun-8 July. Major power producers such as Adani Power, Semb Corp Gayathri Power, and Tata Power are seen bringing in their vessels in the upcoming week.
Adani Enterprise, JSW Steel, and Delta Global are also likely to bring substantial quantities till 8 July.
*Qty in mnt
Short-term outlook
Indonesian coal prices are likely to remain stable as long as Chinese procurement remains under pressure while Indian demand continues to be strong. India’s share in Indonesian coal exports have risen from 22% in 2021 to 32% in 2022 (so far) whereas, China’s share has come down from 32% to 19% in 2022. As long as imported coal prices remain firm, portside prices would also remain rangebound in India.
To know more about the key drivers in the coal economy join us at India Coal Outlook Conference. CoalMint will be hosting the India Coal Outlook Conference on 3-4 August 2022 at The Lalit, New Delhi, to discuss the key issues pertaining to domestic coal production and supply, the government’s objective of controlling imports and domestic supply gap affecting many industries, the need to increase the purchasing power of Indian steel companies in the volatile global coking coal market as well as issues related to decarbonization of the coal value chain.
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