Indonesia’s coal prices edged up this week on rising Chinese demand and on slower production as rains started in some coal-producing areas, traders said.
Thermal coal prices on the globalCOAL Newcastle weekly index, a benchmark for Asia, rose $0.68 to $73.46 a tonne, from $72.28 a tonne in the previous week, fuelled by expectation of strong imports from China through the rest of the year.
Indonesian bituminous coal of 6,300 kcal/kilogram air-dried basis was offered at $59-$61 a tonne, free on board, from Kalimantan, up from $57-$58 a tonne earlier this month.
“Chinese demand continues to flow in addition to some small South Korean trading houses who are also looking for Indonesian bituminous coal,” a regional coal trader said.
Most producers refused to lower prices as they anticipate prices would rise in the weeks ahead because of winter demand, while supply is expected to tighten because of the rainy season, the trader said.
Spot thermal coal prices in China have risen for the sixth straight week to hit a new 2009 high, thanks to increasing winter heating demand and recovering power consumption on the back of a stronger economy.
There was no physical trading at the globalCOAL platform this week.
Indonesian sub-bituminous coal, with a heating value of 5,500 kcal/kilogram ADB, was offered at around $33 a tonne, free on board, up from $31 a tonne early this month.
Most buyers have started looking for renewing spot contracts to secure supplies for next year, traders said, helping to lift Indonesian prices.
“Most buyers are looking for delivery in January. With demand improving, we don’t hesitate to turn down low offers from buyers. There will be plenty of other buyers,” said an Indonesian trader.
Indian and South Korean buyers are in the market for spot cargoes while Chinese buyers were looking at securing long term contracts.
“Our existing Chinese buyers are now looking at extending spot contract into a long-term one, starting next year,” said an Indonesia producer, whose mine produces about 100,000 tonnes a month of sub-bituminous coal and supplying China’s market.
“They still accept if we offer coal $1-2 higher,” one producer said.
There was also offer for coal with a heating value of 5,000 gross as-received at $39 a tonne, FOB barge in the market.
Meanwhile, rains have started in key coal-producing areas of South Kalimantan and East Kalimantan provinces in Borneo island although there was little impact on production.
“Rains have come but it does not happen everyday. It has slowed mining but it’s not yet causing a significant drop in production,” the first Indonesian trader said.
So far, they have not heard of any force majeure on shipments from producers because of rains, the trader said.
Rains on Borneo island’s East Kalimantan — which accounts for more than half of Indonesia’s coal production — may arrive in early November, the State Meteorology and Climatology Agency has said in its latest forecast in September.
Heavy rains had caused a new coal loading facility at Jembayan mine operated by Singapore-listed coal miner Strait Asia Resources to collapse early this month.