OfBusiness Coal Dailies | 19th July 2023

Price

• Prices at Navlakhi port of Grade 3600 GAR is Rs 5200/MT ($65), Grade 3800 GAR is Rs 5400/MT ($71), Grade 4800 GAR is Rs 6400/MT ($79), Grade 5200 GAR is Rs 7600/MT ($92) , Grade 5400 GAR is Rs 8900/MT ($109) and at Kandla port of Grade 3600 GAR is Rs 5600/MT ($68), Grade 3800 GAR is Rs 6000/MT ($73), Grade 4600 GAR is Rs 6800/MT ($90), Grade 5200 GAR is Rs 7800/MT ($95), Grade 5600 GAR is Rs 9600/MT ($117).
• The Australian coal price at Krishnapatnam port is Rs 10000/MT ($122), and at Gangavaram port it is Rs 15000/MT ($183).
• The South African RB2 coal price at Ennore port is Rs 9200/MT ($112), at Krishnapatnam port it is Rs 9400/MT ($115), and at Gangavaram port it is Rs 9300/MT ($114).

Demand and Supply

• Thermal coal exports from Indonesia are likely to decline in the second half (July- December) of this year, 2023. Coal and lignite exports in H1 (January – June) have risen an estimated 22% to around 249 Million Metric tons (MMT) from 205 Million Metric tons (MMT) recorded in H1-CY22.
• Total volumes exported in CY22 rose 9% Y-o-Y to 458 Million Metric tons (MMT) against the backdrop of a global energy crisis set off by the Russia-Ukraine war. China may see a drop in demand in the remaining part of the year, essentially because it is already sitting on a huge inventory.
• China’s total thermal coal imports in H1CY23 from Indonesia are merely 61 Million Metric tonnes (MMT) less than CY22’s total volume of 171 Million Metric tonnes (MMT). Demand from India too may weaken, on the basis of two reasons.
• One, India’s domestic coal production increased a considerable 15% in the financial year 2022–23 (FY23), with Coal India’s share rising 13% Y-o-Y to 703 Million Metric tonnes (MMT). Moreover, India has settled for a production target of more than 1 billion tonne in FY24, which would be another 13% Y-o-Y increase.

News

• With a decline in gas prices, Europe is once again lowering its dependency on coal for power generation. Electricity inflation in the EU had slowed to 13.2% in April from a peak of 52.6% in July 2022.
• This has led to considerable stockpiles of thermal coal at European ports, a fact that is driving many traders to de-stock by re-selling portions they had earlier procured from various supply sources mainly Indonesia and South Africa to buyers in India and Asia in general. Obviously, this coal is coming at discounted prices, much to the buyers’ delight.

OFB’s Opinion

• In light of the ongoing decline in Indonesian coal prices, it seems that Coal India is proactively addressing the anticipated demand for the upcoming summer season by focusing on increasing domestic coal production and enhancing stock levels. As a result, we may witness higher domestic coal prices during the upcoming auctions.