Indonesian thermal coal portside prices drop amid subdued demand

• Absence of trade amid weak buying interest
  
  
• Demand in China market remains low
  
  

The Indonesian thermal coal portside market remained bearish this week due to weak demand. Prices are showing a lacklustre sentiment, influenced by declining buying interest from India, which is affected by the ongoing monsoon, and subdued sentiment from China. Specifically, prices of 3400 GAR coal at Navlakhi Port held steady at INR 5,100/t. At Kandla, the price of 4200 GAR coal dropped by INR 100 to INR 6,200/t ex-port. Meanwhile, prices of 5000 GAR coal at both Vizag and Kandla remained stable throughout the week.

Factors impacting Indonesian coal prices -

Index prices inch down - Indonesian indexed prices of high-CV (5800 GAR) coal were recorded at $92.87/t, inching down by $0.11/t. Indonesian mid-CV prices (4200 GAR) dropped by $0.65/t to $51.18/t. Meanwhile, the low-CV (3400 GAR) prices inched down by $0.35/t to $31.78/t. Prices are on FOB basis.

Monsoon weaken long steel demand in India - In India, heavy rainfall during the monsoon has slowed down construction projects, leading to sluggish industrial demand. This has, in turn, affected the demand for coal, particularly in the coastal regions where power plants blend imported coal. Meanwhile, Indian coastal power plants are showing interest in Indonesian 4,200 GAR coal. However, traders are hesitant to commit to deals, anticipating further price declines.

Global market sentiments - In China, buyers are being cautious, selectively acquiring low-to-mid calorific value cargoes only at favourable prices, as traders are pressured to quickly offload inventory. Domestic spot prices remained steady, with most domestic coal secured under long-term contracts with power plants. As a result, imported cargo prices in coastal regions continue to be competitive.

On the supply side, Indonesian coal production remained relatively stable, with no major disruptions reported. However, some miners are facing issues due to low water levels, which could potentially affect logistics and transport.

Outlook:

The Indonesian thermal coal market experienced a subdued week, with prices softening due to weak demand from India, impacted by the ongoing monsoon and more favourable market conditions in China. However, demand in southern China is expected to increase as hydropower output decreased, while Indian buyers remained on the sidelines, awaiting further price declines.