Indonesian coal prices rose this week on stronger demand as winter took a grip in key Asian markets and with supply expected to slow in coming weeks due to higher rainfall in coal-producing areas, traders said. Thermal coal prices on the globalCOAL Newcastle weekly index, a benchmark for Asia, rose $3.75 to $82.57 a tonne from $78.82 a tonne a week ago on rising demand for winter heating and gains in crude oil, traders said.
Prices were at their highest since January 30 when they hit $82.94 a tonne. Indonesian bituminous coal of 6,300 kcal/kg air-dried basis (ADB) was offered at between $61-$64 a tonne, FOB vessel from Kalimantan, up from $59-$61 a tonne the previous week. "Demand is picking up especially as winter is taking its toll in China, South Korea and Japan," a regional trader in Singapore said. "Indonesian supply will be tight soon as the monsoon is coming up."
Some cargoes of Indonesian coal with heating value of between 6,100-6,300 kcal/kg air-dried basis (ADB) were sold to Chinese buyers at $58 a tonne, FOB vessel for delivery in December. China's appetite for imported coal has provided support for Indonesian coal prices amid slowing demand from traditional buyers such as Japan and with ample supply as a long dry season in the country allowed producers to ramp up production.
Some Indonesian producers had started initial talks on annual term contracts with Japanese buyers while South Korean buyers were still favouring spot tenders, the regional trader said. There were no physical trades in the globalCOAL platform. Indonesian sub-bituminous coal of 5,500 kcal/kg ADB was offered steady at $34-$36 a tonne, supported by demand from China and India.
"We have been receiving many inquiries from existing buyers who have not taken cargoes for months. Now they are back," an Indonesian trader said. "Most of them are Chinese buyers from Southern China," said the trader, who owns a mine that produces about 100,000 tonnes a month and caters to the Chinese and Indian markets.
Indian traders who secured a recent tender were also seen in the market, traders said. India's state-run trader MMTC Ltd completed a tender on behalf of NTPC, the country's biggest power producer, to import 12.5 million tonnes of coal. "Tender winners have not secured the full amount yet. They are still looking around for good spot deals in the market," the regional trader said.
Indian buyers were looking to buy Indonesian sub-bituminous coal of 5,500 kcal/kg ADB at lows of $30 a tonne, traders said. "Indian buyers are bidding too low. We can fetch better prices from Chinese buyers for the same coal quality," the Indonesian trader said.
Indonesian supplies are expected to tighten in the run-up to the end of the year when most producers will have sold out their production for 2009 and as the rainy season advances in coal-producing areas of Kalimantan on Borneo island. Despite the developing monsoon, rains had not yet affected mining or shipments from producing areas, traders said.