Imported Indonesian thermal coal prices remained largely stable this week with 4200 kcal/kg GAR grade coal prices being assessed at $90/tonne (t) and 3400 kcal/kg GAR at 55/t, FOB basis.
With Chinese buyers having moved to the sidelines because of the strict lockdown restrictions in the country, Indian buyers are heard to be booking bulk Indonesian shipments for low-CV coal, in a bid to rebuild stockpile as India labours under the current supply crunch.
Risen imported coal demand despite increased domestic supplies
*Quantity in mnt
Despite increased domestic coal supplies to the power sector, hotter summer this year has led to esclation in India’s power demand that has peaked to a new high of 207 GW ( as on 29 April).
The imported coal demand is so high that, the Indian government has asked power companies to import coal up to 10% of their requirement for blending purposes, while the country’s largest power producer, NTPC, has floated imported coal purchase tenders in batches for a total quantity of 16 mnt.
Coal stock at Indian power plants stood at 21 mnt (as on 14 May), sufficient for 9 days, data from the Central Electricity Authority (CEA) showed.
Subsequently, Indian traders are heard to be booking Indonesian coal at a premium of $2.5-3/t for the branded variety while the non-branded ones are being booked at index-rates amid the sharp rise in power demand, wherein temperatures at several states have risen sharply, even touching record highs.
“Many power plants using Indonesian coal in the western belt are heard shifting to lower-GCV coal, i.e., 3200-3600 GAR amid elevated prices. For Indian power plants, volatile matter (VM) is quite important and these grades have VM ranging from 30-35%,” said a trader based in Surat.
On the supply side, cargo availability from Indonesia is heard to have picked up, incentivizing speedy loading at mines, market participants informed. Also, some market participants told CoalMint that amid sluggish domestic demand in China and increased Russian supplies, Chinese are looking to resell Indonesian coal on the waters at a premium of $2-3/t.
As per CoalMint’s vessel line-up data, a total of 5.12 mnt arrived at Indian ports between 1-15 May, up 5% m-o-m while a total of 0.9 mnt of Indonesian coal-laden vessels are so far scheduled to arrive at various Indian ports between 16-21 May.
Portside prices remain firm
Portside prices of Indonesian thermal coal remained firm amid stable imported prices and strong demand.
As per CoalMint’s assessment, prices of GAR 4200 kcal/kg were assessed at INR 10,300/t at Kandla Port, while those of GAR 5000 kcal/kg were at INR 13,000/t. Prices exclude cess and GST.
According to market participants, trading activity has picked up pace amid the stable price scenario and expectation of a rise in prices in the coming months when monsoon begins.
“Along with the power sector, demand for coal from the cement sector has also been strong currently due to the higher usage at their captive power plants. Procurement from other industries has also started picking up to rebuild stockpile before the monsoon,” a north-India based trader said.
Short-term outlook
A domestic coal supply crunch, and approaching monsoon are likely to keep Indonesian portside prices higher in the near term. Strong appetite for Indonesian coal from major Asian buyers besides China is also seen keeping its prices firm.
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