Indonesia: Thermal coal portside prices to India remain supported

• Slow trade activities amid bid-offer disparity
  
  
• Sufficient stock in domestic market, weak demand
  
  

Indonesian thermal coal portside trade activities in India have remained lacklustre this week. Prices of 3400 GAR coal at Navlakhi Port stood stable at INR 5,200/t, while 4200 GAR at Kandla Port at INR 6300/t ex-port. However, prices of 5000 GAR for both the ports Vizag and Kandla increased this week.

Indonesian index prices of high-CV (5800 GAR) coal were recorded at $92.33/tonne (t), down by $1.36/t. Indonesian mid-CV coal prices (4200 GAR) decreased by $0.58/t to $53/t. Meanwhile, prices of low-CV (3400 GAR) coal decreased by $0.43/t to $33.14/t. Prices are on FOB basis.

The Asian thermal coal prices have been cushioned from further drops primarily due to constrained supply rather than increased demand. Despite reduced production, demand from major consumers like China and India remained lacklustre. Buyers continued to adopt a cautious approach and push for lower prices.

In India, mills have already built up stocks in anticipation of the rainy season, leading to sluggish demand. Additionally, coastal power plants in India reported having high stockpiles, sufficient for over two weeks of burn.

In China, inquiries from end-users have slightly increased, but actual bids remained stagnant. Power plants are already holding substantial coal stocks, which further dampened immediate demand.

On the supply side, the Indonesian coal sector is cautious for supply and is unlikely to meet the government's production target for 2024. The market remained bearish with limited interest from stock-and-sale traders and ongoing challenges from weather conditions affecting production.

Outlook

Despite low demand from major Asian countries and ample domestic production, the miners are contemplating reducing their output targets in the Indonesian thermal coal market. Prices are expected to continue downtrend in near future.