Indonesian thermal coal prices fall

Indonesian thermal coal prices dropped last week. Low-CV (3400 GAR) coal prices decreased by $0.46/t to $37.96/t, while high-CV (5800 GAR) coal prices were up by $0.38/t to $93.16/t.

The prices have been on the lower side on tepid demand from major Asian buyers such as India and China. The market seems to be having sufficient material currently.

On the supply side in Indonesia, the situation is tight because all miners have not received approval for their production quotas (RKAB) for 2024, and the complete overhaul of the system used to apply for these quotas. However, the supply crunch is affecting the movement of January-loading cargoes. Numerous producers are still waiting for country's energy ministry for next year's work plan leading to uncertain market conditions.

Indonesian high CV coal showed marginal rise supported by limited offers from Australia following train derailment in the key Hunter Valley coal producing region.

China's snowfall disrupted domestic coal transport, leading to an increase in domestic thermal coal prices. Cold waves failed to boost sentiment in the thermal coal market due to the ample stock available in the country. Due to market volatility, Chinese buyers were not ready to book Indonesian cargoes at fixed prices, as they aimed to safeguard their profit margins. However, it is expected that north China will experience record low temperatures which may enhance imports.

Indian buying remained on the lower side because of tepid demand and high domestic production.

India: Portside prices down marginally

Thermal coal prices for 4200 GAR coal at Kandla Port remained majorly in line with that in the previous week, at INR 6,100/t. Prices dropped on low buying interest in the domestic market.

Outlook

The demand for Indonesian thermal coal is expected to rise briefly if supply constraints in Australia deepen. This will put upward pressure on Indonesian thermal coal prices in future. Also, prices may head northward on rise in Chinese demand provided temperature's drop further in the country.