Firm marine thermal coal prices and volatile freight rates have dampened interest from former Chinese markets in Asia such as Thailand, Vietnam and India, market sources told S&P Global Platts.
These markets are expected to return in March on the expectation that prices and freight will ease for purchases in April.
Prices rose after Indonesia’s ban on coal exports in January added to tight supply in Asian markets, while firm consumer demand in China and South Korea supported prices. values. Prices for Australian high-ash coal also soared as buyers sought replacement coal.
“India, Vietnam and Thailand have been on the sidelines for some time now. If freight rates return to normal, then things will be viable for them,” said an Indonesian trader.
The price of Indonesian GAR of 4,200 kcal/kg averaged $67.593/t FOB in January and was valued at $80.05/t FOB on February 14, according to Platts data. Meanwhile, the Australian NAR price of 5,500 kcal/kg with 23% ash content averaged $125.66/t FOB in January and was valued at $150.25/t FOB on 14 February.
The lack of floating cranes in Kalimantan has prompted charterers to move cargo on geared Supramax and Ultramax vessels, which have the ability to load and unload themselves, Platts reported Feb. 10.
Meanwhile, market participants said Supramax’s high freight rates were dampening buying sentiment. The Supramax freight rate from South Kalimantan to Krishnapatnam on India’s east coast fell from $16.05/mt on January 31 to $24.85/mt on February 14. Panamax freight for the same route fell from $10.15/mt on Jan 31 to $13.15/mt Feb 14, Platts data showed.
Supramax freight from East Kalimantan to Kohsichang in Thailand dropped 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 developments in the current market, sources said.
Resilient shipping prices and volatile freight rates have also dampened Indian buying sentiment, with buyers relying on coal stored and sold from port stocks.
“India was buying earlier but as prices have gone up there has been some reluctance to make deals so they are waiting,” said one trader. “Thailand is also a price-sensitive market and demand is often sporadic from the country in the spot market.”
India’s thermal coal imports fell 46.79% on the year to 8.58 million tonnes in December, according to data from trading firm Iman Resources, and January imports are also expected to decline.
“I expect that when the offers for April are lower than current levels, these countries will come back to the market to buy,” said an Indonesian producer.
Market participants said utilities in Vietnam that rely on imported coal were in a comfortable inventory position amid high world prices as domestic demand was weak.
“Vietnam’s power plant inventories appear to be at a comfortable level, and consumption is down due to slowing economic activity,” said an Indonesia-based trader.
Imports from Vietnam fell 36.2 percent year on year in January to 1.84 million tonnes, according to preliminary data released by Vietnam Customs.