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Firm seaborne thermal coal prices and volatile freight rates have slowed down interests from Asia’s ex-Chinese markets like Thailand, Vietnam and India, market sources told S&P Global Platts.
These markets are expected to return in March on hopes that prices and freight would ease for procurement in April.
Prices soared after Indonesia’s ban on coal exports in January aggravated supply tightness in the Asian markets while firm demand from consumers in China and South Korea supported values. Prices of Australian high-ash coal also spiked as buyers sought replacement coal.
“India, Vietnam and Thailand are on sidelines for sometime now. If the freight rates are back to normal then things will be workable for them,” an Indonesian trader said.
The price of Indonesian 4,200 kcal/kg GAR averaged $67.593/mt FOB in January, and was assessed at $80.05/mt FOB Feb. 14, according to Platts data. Meanwhile, the price of Australian 5,500 kcal/kg NAR with 23% ash content averaged $125.66/mt FOB in January and was assessed at $150.25/mt FOB on Feb. 14.
The lack of floating cranes in Kalimantan have prompted charterers to move cargoes on geared Supramax and Ultramax vessels, which have the capacity to self-load and discharge, Platts reported Feb. 10.
Meanwhile, market participants said high Supramax freight rates were dampening buying sentiment. The Supramax freight rate from South Kalimantan to Krishnapatnam in the East Coast of India rose from $16.05/mt on Jan. 31 to $24.85/mt on Feb. 14. The Panamax freight for the same route rose from $10.15/mt Jan. 31 to $13.15/mt Feb. 14, Platts data showed.
The Supramax freight from East Kalimantan to Kohsichang in Thailand rose from $11.38/mt on Jan. 31 to $17.25/mt on Feb. 14.
Buyers assess price movement
Demand from Thailand also remained subdued as buyers focused on assessing price movement in the current market, sources said.
Resilient seaborne prices and volatile freight rates dampened Indian buying sentiment as well, with buyers relying on stock-and-sale coal from port stocks.
“India was buying earlier but as prices have gone up, there has been some reluctance on concluding deals, so they are waiting,” a trader said. “Thailand is also a price sensitive market and the demand is often sporadic from the country in the spot market.”
India’s thermal coal imports slumped 46.79% on the year to 8.58 million mt in December, according to data from trading firm Iman Resources, and January imports are also expected to decline.
“I expect when offers for April will come lower than current levels, these countries will again come to the market to purchase,” an Indonesia-based producer said.
Market participants said utilities in Vietnam reliant on imported coal were at comfortable stock position amid elevated global prices as domestic demand is low.
“Vietnam’s stockpiles at power plants seem to be at a comfortable level, plus their consumption is down due to economic activity being slower,” an Indonesia-based trader said.
Imports from Vietnam fell 36.2% on the year in January to 1.84 million mt, according to preliminary data released by Vietnam Customs.