Indonesian thermal coal portside prices inch down as demand continues to wane

• Prices remain under pressure on limited trades
  
  
• Chinese demand may rebound in the near term
  
  

The Indonesian thermal coal portside prices reflected subdued market sentiments this week. The market is witnessing better demand from China and lacklustre demand from India in the ongoing monsoon season.

Notably, prices of 3400 GAR at Navlakhi Port fell by INR 100/t at INR 5,100/tonne (t). Prices of the 4200 GAR at Kandla stood at INR 6,300/t ex-port. Meanwhile, prices of 5000 GAR at both Vizag and Kandla edged down during the week.

In talks with market participants, BigMint learned that Indian buying remained subdued during the week on low power generation needs. End users are expecting further price drop in the market.

Deals recorded this week:

• A deal for 16,000t 4200 GAR heard at INR 6,750/t at Dharamtar port.
  
  
• Another deal for 10,000t heard for 4600 GAR at INR 7,450/t at Dharamtar port.
  
  
• Prices include stevedoring charges but exclude other taxes
  
  

Indonesian indexed prices of high-CV (5800 GAR) coal were recorded at $92.68/t, inching up by $0.23/t. Indonesian mid-CV prices (4200 GAR) fell by $0.28/t to $52.16/t while the low-CV (3400 GAR) inched down by $0.10/t to $32.49/t. Prices are on FOB basis.

Demand scenario: Despite the surge in cooling demand due to heatwaves, high stock levels and increased hydropower production in China have kept a lid on coal purchases. According to sources, Chinese buyers are selectively acquiring low-to-mid calorific value cargoes, but only at favourable prices, as traders face pressure to offload their inventory quickly.

Imported cargo prices in coastal regions remained competitive as domestic spot prices in China held steady, with most domestic coal being sold under long-term contracts to power plants. However, an increase in demand from southern China is expected in the coming weeks, as the recent heavy rainfall has subsided which will lead to a temporary decline in hydropower output.

Several Indian coastal power plants that blend imported coal showed interest in Indonesian 4,200 GAR coal. However, most traders held back, anticipating further price declines before committing to deals. Meanwhile, some Indian coastal power plants showed interest in low-calorific value cargoes, although industrial demand remained sluggish due to a slowdown in construction projects caused by heavy rainfall.

Supply scenario - On the supply side from Indonesian mines, no major disruption was seen except a few major miners facing issues due to low water levels.

Outlook - The Indonesian thermal coal market remained subdued this week, with prices softening amid tepid demand from India due to the ongoing monsoon and more favourable market conditions in China. Indian coastal power plants showed limited interest due to slow construction activities. Demand in southern China may rise as hydropower output declines going forward, while Indian buyers remain on the sidelines expected further decline in prices.