The Asian thermal coal market has seen a slight improvement recently. As of September 5, the FOB price of 4,200 kcal Indonesian coal in Kalimantan Port was US$79/ton, an increase of US$2.5/ton on a week-on-week basis and a monthly increase of US$1.05/ton; the FOB price of 3,800 kilocalories was US$64/ton, a weekly increase of US$1.05/ton. The month-on-month increase was $1.25/ton, and the month-on-month decrease was $1.25/ton.
Market participants see room for upside in the near term. From the perspective of domestic demand in Indonesia, rising fuel prices may lead to an increase in electricity consumption, driving up coal consumption. From the perspective of international demand, a Singaporean trader said that the demand in the Chinese market in September can be expected. The spot coal mines are relatively small, and Chinese buyers have more inquiries for the goods to be loaded at the end of September. At the same time, buyers from Japan and South Korea are inquiring about 2-3 months of forward cargo, and traders are still waiting to see the signing of mid- and long-term coal purchase contracts from Korea Electric Power Company.
Indian buyers are not very motivated to purchase, and there are only some inquiries for low-calorie Indonesian coal from hoarding traders. Recently, domestic coal production in India has also been considerable. According to data from the Ministry of Coal India, the coal production of self-operated coal mines in India in August increased by 27.06% year-on-year to 8.02 million tons. Coal India (CIL) produced 46.2 million metric tons of coal in August, up 8.5% year-on-year. Including output from the Singareni Coal Mine (SCC), all-India coal production in August was 58.3 million tonnes, up 8.27% year-on-year. India expects coal production to reach 920 million tonnes this fiscal, an annual growth rate of 18.4%.
To encourage higher production, the Indian government allows self-operated mines to sell up to 50% of their annual production to other consumers, subject to end demand. According to data from the Central Electricity Authority of India, on September 4, the coal inventory of Indian power plants was 28.57 million tons, and the available days were more than 10 days. Inventories in May fell to 23.58 million tonnes at one point, weakening seasonal demand, coupled with ramping up production, India’s coal shortage has eased, and inventories are now in good shape, with Coal India’s (CIL) pits remaining as of end-August. 31 million tons of inventory. Indonesian miners are optimistic about the outlook, arguing that the bullish trend may continue into October. In addition to Indonesian coal, the high calorific value coal in the Asian market mainly comes from Russia and South Africa. Compared with South African coal, Russian coal still has certain advantages in terms of cost performance.
