Indonesian lower grade thermal coal offers aplenty but demand muted

Singapore (Platts)--11Mar2014/651 am EDT/1051 GMT

 

Lack of firm bids from both India and China is putting downward pressure on Indonesian thermal coal prices, even as prompt-loading cargoes are being widely offered in the market, sources said Tuesday.

 

"The [thermal coal] market is bearish and I don't see much requirement from end-users," a Singapore-based trader said. "There are several enquiries but it's more for price discovery," he added.

 

Higher freight rates -- especially for Supramaxes -- continue to keep buyers at bay, sources said.

 

"There are several coal cargoes available but deals are not getting done," the Singapore-based trader said. "Higher freight rates are a deterrent," he added.

 

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Supramax freight rates from South Kalimantan to India have gained nearly $4-5/mt in the past one month, sources said.

 

A Singapore-based shipbroker estimated Supramax freight rates from East Kalimantan to Ennore on the east coast of India at about $15/mt and to the west coast port of Navlakhi at about $17/mt.

 

The upcoming Indian monsoon season, which runs from May to September, is expected to have little impact on demand as most of the Indian ports remain open through the year, the Singapore-based trader said.

 

Only three ports on the west coast of India -- Porbandar, Muldwarka and Magdalla -- would be shut during the monsoon season and the Mumbai port would be partially impacted, while others are "all-weather" ports, he added.

 

Demand for lower grade coal from India remains quite muted, with very few inquiries for 3,800 kcal/kg GAR coal, he said.

 

An Indonesia-based trader said although there were no firm bids, buyers could get such cargoes at about $32/mt FOB but if they commit to three cargoes. However, for a spot shipment, buyer would have to pay about $32.50-33/mt FOB for single-mine, "good quality" coal, he added.

 

A Chennai-based trader said that 3,800 kcal/kg GAR coal was widely available with deals possible at between $32-33/mt FOB, but Indian demand was nearly absent.

 

"Most of [the Indian buyers] are buying 4,200 kcal/kg GAR coal instead at about $37-38/mt FOB," he added.

 

SPARSE DEALS

 

A second Chennai-based trader said that he has closed a deal for three Supramax cargoes of Indonesian coal -- two for 4,200 kcal/kg GAR and one for 4,600 kcal/kg GAR.

 

The deal for 4,200 kcal/kg GAR was closed at $37.25/mt FOB for March delivery and for 4,600 kcal/kg GAR at $47/mt FOB for April delivery, he said.

 

He said Indian buying had slowed amid higher freight rates, adding that he was offering a Capesize cargo of 6,000 kcal/kg NAR US coal with 3% sulfur at $94-95/mt CFR east coast India but counter bids were not immediately available.

 

Elsewhere, a Panamax cargo of single-mine 4,700 kcal/kg NAR Indonesian coal was being offered at $58/mt FOB for April arrival but Chinese buying interest was not higher than $55/mt FOB, a China-based trader said.

 

Chinese buyers are ready to pay about $52-53/mt FOB for Supramax cargoes of Indonesian 5,000 kcal/kg GAR coal, but March shipments are hard to come by due to some supply tightness, the Singapore-based trader said. Offers for April-loading, Supramax cargoes of single-mine 5,000 kcal/kg GAR coal are at $55-56/mt FOB, he added.

 

The Indonesia-based trader said that Indian bids for April-loading, Supramax cargoes of 5,000 kcal/kg GAR coal were at $54.50/mt FOB, while offers for blended coal were at $54-54.50/mt and for single-mine material at $55-55.50/mt FOB. March cargoes are not widely available, he added.

 

The Singapore-based trader said there were not many firm bids and offers for 5,900 kcal/kg GAR Indonesian coal, but added that he expected the market price for this grade to be about $70/mt FOB for Supramax geared shipments.

 

Platts assessed the price for FOB Kalimantan 4,200 kcal/kg GAR coal at $37.50/mt, down 40 cents on the day, while FOB Kalimantan 3,800 kcal/kg GAR was assessed at $32.50/mt, up 25 cents on the day.

 

Platts assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $55.50/mt, down 40 cents, while FOB Kalimantan 5,900 kcal/kg GAR coal was assessed unchanged at $69.80/mt.

 

--Day