ASIA COAL MARKET: Indonesian coal prices continue to slip on lack of demand

Friday, 2 Dec, 2011

Manila (Platts): Indonesian coal prices continued to soften Friday as reports trickle in that that barging is now being allowed at the Mahakam river and Chinese importers are not serious about chasing spot cargoes.

A trader said his Chinese associates are still asking him to offer Indonesian coal in China, but added that he is not trading as he feels that Chinese importers will only buy at prices lower than what they have been offered.

He said he received a Chinese bid for 5,000 kcal/kg GAR Kalimantan coal at $76.50/mt FOB for blended material.

An Indonesian coal producer previously offered to sell at $77/mt FOB.

The producer has not yet responded to the Chinese bid and may likely agree to lower the price, he said.

"I am trying to close something for 5,000 kcal/kg GAR," the trader said, adding that Indonesian coal prices continued to remain soft.

Meanwhile, the supply disruption caused by the November 26 collapse of a public suspension bridge at the Mahakam river failed to give support to Indonesian coal prices, industry sources said.

On Friday, a north Asian buyer said coal-carrying barges have been now allowed to pass through the portion of the Mahakam river where the bridge collapsed.

Separately, Mahakam Sumber Jaya, or MSJ, a unit of Tanito Coal, which declared a force majeure on its December shipments after the bridge collapsed, has lifted the declaration Thursday.

A second trader said there are hardly any buyers for Indonesian cargoes, adding that Kalimantan prices are edging lower.

Another trader said there continued to be very few bids out of China, describing bids by Chinese importers as all over the place.

"The same is true for Indonesian coal price offers," he said.

He added that Indonesian CFR price offers for 4,000 kcal/kg NAR coal for south China delivery were between $65/mt and $82/mt.

Platts assessed Thursday the FOB Kalimantan 5,900 kcal/kg GAR at $98.00/mt, a $0.25/mt decline from a day earlier and FOB Kalimantan 5,000 kcal/kg GAR at $76.00/mt, down $0.25/mt day on day.

(Courtesy sourced Platts)

Vietnam's 2012 coal exports to fall, imports eyed

Friday, Dec2, 2011

HANOI (Reuters) - Vietnam plans to reduce its coal exports next year by 18.2 percent from this year's projected shipments to 13.5 million tonnes, a senior official in top coal miner Vinacomin was quoted on Thursday as saying.

Vietnam is a net coal exporter but it is expected to turn into an importer by 2015, when a series of thermal power plants start operation. It has already started reducing exports to save supplies for domestic consumption.

Annual exports will fall to 8 million tonnes in 2013 and between 4 million and 5 million tonnes a year from 2015, based on an Industry and Trade Ministry masterplan, Vinacomin Chairman Tran Xuan Hoa told the state-run Tuoi Tre newspaper.

Annual imports would be 5 million tonnes from 2015, Hoa said.

Hoa could not be reached on Thursday for comments.

Vietnam has imported coal from Australia and has been looking to buy from Russia.

In June, Vietnam received 9,570 tonnes of its first thermal coal shipment from Indonesia, officials said.

Japan's Marubeni Corp has agreed in principle to sell Vinacomin up to 2 million tonnes of Australian or Indonesian coal a year and hopes shipments can start in 2015-16.

Two sources at Vinacomin said on Thursday the group did not have specific annual import targets until 2015, but small imports will take place.

"We do not have a plan for coal imports next year," a Vinacomin executive said.

"Our subsidiaries may import small volumes in preparation for future imports and that's not our plan... Maybe they will look at nearby suppliers to buy coal," he said without naming any buyers.

By allowing such imports, Vinacomin wanted its subsidiaries to become familiar with the process, another source said.

Hoa said Vietnam could still maintain its exports if the price was in line with global prices.

"In the long run, if our coal prices follow international prices, it is beneficial for the southern region to import coal, while the northern region will run production to meet its demand and export will be more efficient," he told the daily.

Quang Ninh province in the north is Vietnam's main coal mining and processing zone.

The northern Red River basin is also believed to contain significant coal reserves but they are mostly untapped as the region is the country's largest rice growing area after the Mekong Delta in the south.

Vietnam exported 15.11 million tonnes of coal between January and November, down 12.3 percent from the same period last year, government statistics show.
(sourced Reuters)

When will China regain its appetite for thermal coal?

SHANGHAI, Wed Feb 2, 2011, By Fayen Wong
(Reuters) - A steep discount for Chinese versus international thermal coal prices could persist through the first half of the year, as global values are bolstered by rain-led output disruptions and Chinese demand enters a seasonal lullChina has become the motor of the world coal market in the past two years after the closure of many of its own mines forced it to import. But in the past few months local prices have been relatively subdued, thanks to government crackdowns on power usage, inflation and -- so far -- the absence of a supply crisis triggered by winter.
At the same time, Australian miners are struggling to get back to normal after devastating floods decimated production, put a premium on their supplies and lifted the world market. The flood premium could linger into the second quarter, meaning a grim outlook for trading firms focused on spot sales into China.

"Thermal prices in Australia and South Africa will make it prohibitive for China to import large volumes from those countries in the first half. So we'll be seeing pretty sluggish imports over the next few months," said Bonnie Liu, a Shanghai-based analyst for Macquarie Bank.
For China's coal-hungry southern provinces, the price gap between Chinese and Australian supplies widened to $30 a tonne in mid-January - the highest in eight months -- when the worst flooding in Queensland since 1974 wreaked havoc on shipments.
Although the discount has since narrowed to about $19 a tonne, forward prices for both Australia's Newcastle and South Africa's Richard's Bay coal futures suggest the arbitrage will stay closed at least until May.

Should this be the case, trading houses such as Trafigura, EDF Trading, Glencore and Gunvor -- which thrived in 2010 selling millions of tonnes of Australian, South African or Colombian coal into China -- would have to work harder to make their dollars.
Thermal coal prices in Australia, a benchmark for Asia, are hovering at about $151.80 per tonne on a landed basis into southern China and imports from South Africa cost $148, after adjustments for coal quality. But shipping coal from China's Qinhuangdao to the south costs only $133 a tonne based on coal with heating value of 5,800 kcal/kg, net as received.
Australia and South Africa are China's second and third largest thermal coal suppliers after Indonesia. Thermal coal shipments from the two nations were 22.2 million tonnes in 2010, or about a quarter of China's total steam coal imports.

Some analysts reckon China's thermal coal imports, which averaged 7 million tonnes per month in 2010, could fall to just around 5 million tonnes from as soon as February.
"As China cuts Australian and South African imports, the only other Asian supplier China could turn to would be Indonesia. But the wet season is only expected to end in March and forecasts show rains may drag beyond June," Macquarie's Liu said.
Most Indonesian miners are also still struggling to ramp up output after unusually long rains in 2010 slowed mining and prompted some coal companies, including PT Bayan Resources (BYAN.JK), to declare force majeure on shipments.

But hopes of drier weather returning are dampened by forecasts by the country's weather bureau, which predicted the current wet season would stretch on until June.
"Chinese prices may briefly rebound as utilities rebuild their stocks, but the gap won't close. Besides, the Chinese market typically enters a seasonal demand lull after February and that means domestic prices would either stay flat or move lower," said Andrew Driscoll, an analyst at CLSA Asia-Pacific Markets, who is forecasting Shanxi blend coal to fall by 10 yuan to 765 yuan in the second quarter.

"Improved weather in the coming months would lift domestic coal production and increased hydropower could also put downward pressure on China's coal prices."
With Beijing vowing to combat inflation, trade sources said Chinese state-owned coal miners, which make up about half of coal production, are under pressure to keep down spot prices, with the government having ordered producers to keep 2011 contract prices unchanged from 2010.

RAIN, RAIN EVERWHERE
Australia's floods are expected to cut coal exports by 15 million tonnes in the period from December to March, but mining kingpin BHP Billiton (BHP.AX) (BLT.L) has warned operations could be hit for at least six more months -- suggesting that total tonnage lost could be greater.
Although the flooding has mostly affected coking coal mines, it would offer support for thermal coal prices for months to come, as miners in both Queensland and New South Wales change their production mix to sell more higher-priced coking coal, with lower grade semi-soft and PCI coal fetching more than $100 a tonne compared to thermal coal.

Although Australia's spot thermal coal prices have shed 8 percent since mid-January to $127 a tonne, analysts reckon prices may have reached a floor.
"We don't see much more downside than this, with the slow recovery in (Queensland's) Bowen Basin and high PCI and semi-soft coking coal prices keeping thermal coal supply tight for a good part of 2011," said Mark Pervan, an analyst at ANZ Bank.
In Indonesia, the world's largest thermal coal exporter, some suppliers said they have received more enquiries for shipments in the second quarter, but few have extra cargoes to offer and traders complain that maximum offers from Chinese buyers were at least $10 a tonne lower than market rates.

South African coal prices have received support from Asia's supply tightness, with heavy rainfall also slowing output. Severe rains across Colombia have caused damage to mining and transport infrastructure.
"The government meteorological bureau has forecast the rains to last until March, and possibly even until May. So we expect Colombia's export growth to be subdued this year," said Raymond Chan, a thermal coal analyst at Standard Chartered.
(Additional reporting by Fitri Wulandari and Michael Taylor in JAKARTA; Editing by Clarence Fernandez, sourced:reuters)

ndia Coal Imports May Fall

JANUARY 20, 2011

NEW DELHI -- India's coal imports may fall this financial year after extreme weather conditions in main producing countries pushed up global prices, Coal Minister Sriprakash Jaiswal said Thursday.

International coal prices have surged in recent months because of heavy floods in Australia's Queensland region that have disrupted mining activities at a time when demand from Asian importers such as China and India remains strong. India imported 44.28 million tons of thermal coal and 23.46 million tons of coking coal in the last financial year that ended March 31, 2010.

JANUARY 20, 2011

The South Asian nation is likely to face a shortage of 83 million tons this financial year as local output of 573.42 million tons lags demand of 656.31 million tons. Lower-than-estimated imports could hurt electricity generation while surging prices may hurt earnings at cement, power and steel companies.

The power ministry had fixed an import target of 35 million tons of coal this financial year. The utilities imported 16.12 million tons until December-end, the Central Electricity Authority's website showed.

The agency said generation at coal-based power plants rose 3% from a year earlier in the April-December period to 387.91 gigawatt-hours, but missed the government's target of 406.51 gigawatt-hours mainly due to coal shortages.

According to the globalCoal website, the price of thermal coal rose to $136.30 a ton at Australia's Newcastle port for the week ending Jan. 14, from $129.90 a ton the previous week.

Mumbai-based Kotak Securities Ltd. said in a Jan. 11 note that the price of Australian coking coal has surged 32% year-on-year to $230 a ton.

Australia supplies two-thirds of the global market in the premium hard coking coal used in blast furnaces, and the Newcastle port is the world's biggest thermal coal export terminal.

Minister Jaiswal also said the ministry may consider raising domestic coal prices after July.

"Coal India Ltd. is due to finalize its next wage revision by then. So the quantum of the rise will be dependent on the burden of the wage revision on the company," he said.

State-run Coal India, which accounts for more than four-fifths of local production, is free to fix coal prices but in consultation with the government.

sourced:The Wall street Journal, by Saurabh Chaturvedi & Rakesh Sharma