Chinese demand for Indonesian coal likely to ease

Chinese demand for Indonesian coals is expected to ease in the next few weeks ahead of the Chinese New Year holiday in February and as weather in China improves, traders said. Supply from the world's top thermal coal exporters remained tight as heavy rains in coal-rich Kalimantan, on Borneo island, slowed down loading of the fuel.
But with the weather likely to improve in the coming weeks, more coal can be loaded and flow on to the market, traders said. Thermal coal prices on the globalCOAL Newcastle weekly index eased below $100 a tonne to $99.75 a tonne on Thursday, free-on-board (FOB) Australia's Newcastle port.
"We see signs that demand from China is cooling off. They are not willing to pay as much as what they paid last month," a regional trader based in Jakarta said. "They may have enough coal by now." Chinese buyers were looking to buy Indonesian coal with a heating value of 6,300 gross air-dried (GAD) at $62-$63 a tonne, FOB Vessel, down from $65-68 a tonne last month, the trader said.
Spot thermal coal prices in Qinhuangdao, China's top coal-shipping port, held steady from a week earlier, halting a four-month rise as improving weather conditions eased coal and power shortages. India's demand for spot cargoes of Indonesian high-quality coal slowed as buyers had secured long-term contracts and prefer to buy from South Africa, an Indonesian producer said.
INDONESIA SUB-BITUMINOUS Strong Chinese demand, combined with wet weather in coal-producing areas in Kalimantan and Sumatra, has pushed up prices of Indonesian low-quality coal. Indonesian sub-bituminous coal with a heating value of 5,500 kcal/kg air-dried basis (ADB) was traded at $37 a tonne, FOB vessel, up from $36 a tonne in early January.
"Everybody is looking for coal but we don't have stocks left as rains have slowed production. We only produce about 60 percent of our target," said an Indonesian producer whose mines are producing about 3 million tonnes a year. "Most traders are Chinese buyers. We are already fully-booked until April to China," he said.
Most Chinese buyers were looking for long-term contracts of one year, traders said. But Indonesian producers were reluctant to lock into such agreements because they expect prices to decline, particularly with China's demand likely to ease soon due to the warmer weather and as shipments slow ahead of Chinese New Year.