Indonesian thermal coal prices decline w-o-w
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Indonesian thermal coal prices declined this week. Prices of high-CV (5800 GAR) coal recorded at $96.01/t, fall of $0.20/t. Indonesian mid-CV coal prices (4200 GAR) decreased by $0.76/t to $54.55/t. Meanwhile, prices of low-CV (3400 GAR) coal decreased by $0.46/t to $34.44/t. Prices are on FOB basis.
The Asian thermal coal market seems to be experiencing a persistent disparity between bid and offer levels, primarily driven by lower coal consumption in China and increased supply domestically. Despite some inquiries from Indian buyers restocking before the monsoon, buyers are cautious due to the significant gap between offers and bid levels.
In India, while there is demand, buyers are leveraging better domestic production and supply to negotiate with sellers. Although inquiries, especially for 4,200 kcal/kg GAR, are present, bid levels remain low compared to premium offers. Buyers are not rushing to book cargoes, opting to wait for prices to potentially decrease further. Coal consumption at power plants in eastern and southern India has decreased due to rainfall, while power demand remains high only in the northern region. Cargo movements from Indian ports to power plants are limited, as they are well-stocked. Consequently, end-users are now seeking cargoes for August loading.
In China, the pace of coal consumption for power generation in China has slowed due to heavy rainfall and robust domestic stock levels. Weak demand for seaborne coal persists as the country relies more on hydropower generation due to favourable weather conditions. Chinese traders have been shorting the market, and power plant tenders are low due to efficient hydropower generation. Additionally, port congestion is causing some Chinese buyers to postpone delivery of cargoes.
On the supply side, fundamentals in Indonesia remained unchanged, with no operational issues causing disruptions. Although some parts of South Kalimantan are experiencing rain, it is not expected to impact prices significantly as spot demand remained subdued.
Overall, while there are fluctuations in demand and supply dynamics in the Asian thermal coal market, buyers and sellers are navigating through these challenges with caution, waiting for more favourable conditions before engaging in significant transactions.
Portside prices supported
Prices of 3400 GAR coal at Navlakhi Port stood at INR 5,150/t, while 4200 GAR at Kandla Port was priced at INR 6300/t.
Outlook
Indonesian coal prices are expected to stay low due to subdued industrial demand, which has not increased post-election because of the arrival of the monsoon in multiple states in India. Besides, China, on account of facing rains and high port inventory is expected to have low demand in near term.
