India imports more coal from Indonesia

April20, 2011

Indonesian coal exports jumped 23.31 percent during March 2011. The world’s largest coal exporter shipped 27,164,079 mt of coal in March up 23.32 percent from its February exports of 22.02 million tons, according to the industry sources. India and china have taken a share of 28.37 percent and 16.52 percent respectively.

India has imported a total tonnage of around 7.707 MMts up 66.42 percent (4.631 MMts in February) and Chinese imports reached 4.488 MMts up 5.99 percent (4.234 MMts in February).

India remained the largest importer of Indonesian coal since January 2011. China was the largest Indonesian coal importer during 2009 and 2010, but India pushed China to second place in this year.

44.89 percent of total Indonesian coal exports in March goes to fuel hungry countries India and China.

Top five Indonesian coal importers in March were India, China, Japan South Korea and Taiwan.

According to market players, since 2009 Indonesian coal witnessed higher exports due to the increased demand from India and China. Chinese and Indian end-user are always keep an eye on Indonesia for their coal needs, due to the fact that Indonesia is closer to their ports. This results in lesser voyage time resulting in lesser sea freights., which makes their landed cost competitive compare to other origin of coal as well as indigenous coal.

Increase in Indonesian exports of Low rank coal picked up in recent months. Due to domestic coal shortage, Indian consumers have devised a primitive method of blending of Low rank high moisture coal of Indonesia with the available domestic coal. Indian domestic coal characterized by high ash (30% to 40%) and low moisture (9%) which can advantageously blend with Indonesian Low rank coal of high Moisture (<50%) and low ash (<8%).

Also the increase of Bio Mass and Co-generation capacities Low rank coals have become the order of the day. Also the higher discount prevailing for Low rank coals have encouraged their usage.

Due to the spate of demand for Low ranking coal (<3200 GAR coals with Moisture of up to 50%) Sumatra based LRC suppliers were also targeting Indian market for their exports. In view of this encouraging business Industry is worried and closely watching the proposed Indonesian Govt. policy of banning exports of Low ranking coals. Indonesian government proposed the coal producers to up-grade their coal to higher energy value prior to export to have high price. The Government regulation is expected in Year 2014.

One of the Indian traders commented that due to the Somali pirate's threat to the Indian coal vessels heading to the west coast of Indian ports , buyers of South African coal may avoid pirate's dominated zone for safety of their crew members and cargo. Unless there is a firm action from Indian naval forces as well as international community on pirate attacks on the vessel which were passing through pirate attack zone, the growth of coal trade between India and south Africa will be affected.

For a short term, Indian coal buyers may look at alternative sources of supply. Will SOMALI PIRATES force Indian coal buyers to reduce procurement from South Africa? Register your opinion Yes, For A Short Period, No, May Be.

However, the next few months being summer months in India the demand for power, steel and cement increases thereby the movement in coal may be witnessed resulting in higher consumption.

Indonesia already successfully implemented monthly coal reference price for its coal. Coal ministry also fine tuning their coal reference prices on monthly basis. Coal producers were asked to comply with the government declared index prior to conclude any short term and long terms coal sales agreement with its buyers.

Indonesia’s Ministry of Energy and Mineral Resources has set the April 2011 Indonesian Coal Reference Price for thermal coal at US$ 122.02 per ton, which is 0.33 percent lesser than March 2011 price of US$ 122.43 per mt fob vessel.

Instead of minor dropping in HBA, Indonesian coal prices were still at stable position. small scale mines from Kalimantan were offering 6300 GAD coal between US$ 82 - 87 per MT and premium coal supplier's prices were already in high nineties or at three digits pricing, an international trader said.

According to market stakeholders, the prices may stand stable due to Japan's earth quake, tsunami and nuclear power plants blast, but the prices and demand are expected to move more stronger in coming months.

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