Transportation challenges persist in Indonesian mines
Overall coal demand in key importing geographies subdued
Indonesian thermal coal prices dropped towards last week. Prices of low-CV (3400 GAR) coal decreased by $0.44/tonnes (t), reaching $34.87/t, while high-CV (5800 GAR) coal fell by $1.10/t, settling at $92.92/t.
On the supply side in Indonesia, transportation challenges persist in certain mines of East Kalimantan due to decreased water levels in the river, leading to difficulties for barges. Additionally, roads damaged by rain in Sumatra have yet to be repaired. Indonesia coal Prices have been declining form few weeks in past, some miners are extending their Ramadan holidays to suspend production in order to prevent further price drops, as the market is already experiencing a shortage of demand.
Overall demand remains subdued as top consuming countries rely on ample domestic stocks. The decrease in Chinese domestic coal prices continues to impact demand fundamentals in the Asian thermal coal market. Chinese power plants, with available coal burn, have canceled tenders, further exacerbating the expectation of dropping prices. Chinese buyers prefer domestic coal due to its competitive prices. Chinese domestic prices are currently incomparable to seaborne coal prices, as there remains a significant gap. Chinese domestic prices are decreasing rapidly.
Demand in India for Indonesian coal remains weak despite sufficient domestic stocks. Coal stockpiles at Indian power plants are adequate. The power ministry recently urged power plants in the country that solely operate on imported coal to operate at full capacity until September. Demand from India remains low, with only a few power plants occasionally purchasing Indonesian mid-CV coal. Most buyers are adopting a wait-and-watch approach amidst market volatility.
India: Portside prices drop by INR 100/tonnes
Thermal coal prices of 4200 GAR coal at Kandla Port have dropped to INR 6,200/tonnes. This drop in prices can be attributed to subdued demand.
Outlook
Prices in Indonesia are expected to decrease as demand remains subdued from major importing countries like India and China. China prefers domestic coal as prices there are lower compared to Indonesia, while India has sufficient inventories. Some miners in Indonesia are extending their Ramadan holidays to suspend production in order to prevent further price drops, as the market is already experiencing a shortage of demand.
Source: BigMint
