The demand for Indonesian thermal coal is on the rise due to India and Bangladesh increasing their imports, while Chinese buyers are currently adopting a cautious "wait-and-see" approach.
Indian buyers have recently stepped up inquiries on Indonesian coal from low- to high-CV grades, even with good demand for ultra low-CVs such as 3,000 Kcal/kg NAR material, in an effort to prepare for expected strong power demand after the monsoon season.
Currently, for almost all grades, the prices Indian buyers could accept were above corresponding indexes, an Indonesian mining source reported. He mentioned 3,000 Kcal/kg NAR coal was bid at a $2/t premium to the index. "These coal cargoes have been long stockpiled at ports. The prices could be higher if the quality is better."
Indian demand for Australian and Russian coal is growing due to favorable shipping rates. As of August 22, coal stockpiles at Indian power plants totaled 31.65 million tonnes, enough to cover more than 11 days of use, according to the latest data by the Central Electricity Authority.
Meanwhile, demand from Bangladesh also improved. They were mainly seeking cargoes above 4,700 Kcal/kg NAR, with buying interest at premiums ranging from $1.5/t to $3/t to index. Currently, high-CV coals seem more affordable on a per Kcal/kg basis than low-CVs.
Demand from Chinese traders was tepid, although the Indonesian miner reported a Panamax 3,800 Kcal/kg NAR cargo sold to China at a $3.5/t premium to the index for September-loading.
Chinese buyers were awaiting more clarity as China's domestic market has shown an upward trend, which, if staying longer, could drive up the seaborne import market.
Chinese buyers are currently being cautious due to an anticipated decrease in consumption during September and October, which is typically a slow period for the industry, sources pointed out.
Some Chinese traders also complained about the unfriendly trading atmosphere as Indonesian miners were reluctant to sell at lower prices while Chinese utilities refused to accept higher prices. Several utilities were heard to have scrapped their tenders as they were unpleasant with the prices.
A state utility reportedly awarded a 3,400 Kcal/kg NAR cargo for delivery in September 20-30 at 405 yuan/t, DDP with VAT. The lowest offer it received from traders reached 482 yuan/t, netting back to $52/t FOB on a Panamax basis. It is yet to know if the utility finalized the deal.
For Russian coal, high-CV cargoes have been rarely seen in the market. Some Sakhalin-based 4,700 Kcal/kg NAR coal was offered at around 665 yuan/t CFR China, for late-September delivery, netting back to $73/t FOB. Some 5,500 Kcal/kg NAR coal was offered at $90/t FOB.
The Australian coal was quiet, with 5,500 Kcal/kg NAR coal offered at $85-86/t FOB. Shipping rates were around $13/t for Capesize vessels and $14.5/t for Panamax vessels from Newcastle to South China.
On August 25, the CCI index for Indonesian 4,700 Kcal/kg NAR thermal coal was at $79.5/t CFR south China and $72.7/t FOB Kalimantan, both flat from a day ago. Assessments for Indonesian 3,800 Kcal/kg NAR coal were at $58.5/t CFR, down $0.5/t from the previous day, and at $50.5/t FOB, a $1.0/t fall.