Indonesian thermal coal prices exhibit mixed trends

• High-CV coal prices rise on increased enquiries by Asian buyers
  
  
• Coal supplies ease as rainfall impact recedes
  
  

Indonesian thermal coal prices exhibited diverse trends this week. Prices of high-CV (5800 GAR) coal increased by $0.78/tonne (t), settling at $96.87/t. Indonesian mid-CV coal prices (4200 GAR) decreased by $0.26/t to $55.99/t. Meanwhile, prices of low-CV (3400 GAR) coal decreased by $0.12/t to $35.35/t. Prices are on FOB basis.

On the supply side in Indonesia, production remained steady this week as supply constraints were reduced, and the impact of rains subsided in most parts of the country. Last week, Indonesian low-CV cargoes were sufficiently available in the market to meet current demand, which has increased due to scorching heat in many Asian countries. However, high-CV cargoes remained scarce in the spot market, with pockets of demand seen in Japan and parts of China.

Incessant rains in South China have dampened activities in the Asian thermal coal market, with enquiries from southern China remaining low this week. Conversely, demand was observed from northern China, which is still facing a supply crunch from domestic mines due to strict safety inspections in Shanxi, one of the major producing hubs. This has restricted output from the region. In Inner Mongolia and Shanxi, increased safety and environmental protection inspections have further impacted production, causing domestic prices to inch upward. As a result, enquiries from northern China have increased due to the rise in domestic coal prices.

In India, summer cooling demand has led to an increase in coal-based electricity consumption in the northern states, as several Indian cities recorded the highest maximum temperatures of the year. Meanwhile, several coastal power plants have begun winding up summer buying as rains lashed several states, with the monsoon expected to arrive in a few days. Demand from the non-power sector remained subdued. However, market participants believe that spot demand will increase as several parts of the country are struggling with the impact of extreme heatwaves.

Portside prices drop

Prices of 3400 GAR coal at Navlakhi Port stood at INR 5,100/t, while 4200 GAR at Kanlda Port was priced at INR 6,250/t.

Outlook

Indonesian coal prices might increase in the coming week as China's domestic coal prices rise due to safety and environmental inspections, which are hampering domestic production. This will likely increase enquiries from China and India, where demand has surged over the last two weeks as temperatures reached their peak. This positive outlook is expected to drive prices upward.