Indonesian Power-Station Coal Prices Seen as Little Changed

By Bloomberg on 01:58 pm Sep 13, 2013

Prices of power-station coal in Indonesia, the world’s biggest exporter, may be little changed in coming weeks, according to Bloomberg News survey.

Indonesian thermal coal with a calorific value of 5,800 kilocalories a kilogram and as much as 2 percent sulfur averaged $67 a metric ton in the week ended Sept. 6, down from $68.25 a ton in the week earlier, according to the median estimate of six traders surveyed from Sept. 9 through today.

Sub-bituminous coal with a heating value of 4,500 kilocalories a kilogram and maximum 1 percent sulfur averaged $46.25 a metric ton in the same week, compared to $44.50 a ton, according to the survey. Coal with a calorific value of 4,000 kilocalories a kilogram and 0.5 percent sulfur averaged $39 a ton, gaining from $38 a ton previously, the survey showed.

Three traders said prices will be steady, while another two estimated prices will extend declines as the slumping rupee slows Indian demand. A sixth trader forecast an increase on improving demand as buyers will start scouting cargoes for winter stockpile.

Coal at the Australian port of Newcastle, the benchmark grade for Asia, dropped 35 cents to $76.75 a ton in the week to Sept .6, according to IHS McCloskey, a Petersfield, UK-based provider of coal data.

Renegotiation     

A few Indian traders or end-users have tried renegotiating Indonesian coal prices for short-term contracts to align with inflation, economic growth, trade deficit and slumping rupee and rupiah, Marex Spectron, a broker in Singapore, said in a report on Sept. 11.

“The demand is immense, but due to these factors, Indian end users prefer to either use domestic coal or port stock or to cut down output at break even,” Marex Spectron said in the report.

Indonesian prices are on a gross-as-received and free-on- board basis at Kalimantan or Sumatra, the country’s two main coal-producing regions. They represent cargoes loaded on Supramax vessels, which can carry about 50,000 tons. Actual prices may vary by grade, depending on moisture, ash and sulfur content, loading point and rate.

About 60 percent of Indonesia’s coal is classified as sub- bituminous. Higher moisture levels and a lower carbon content reduce its heating value compared with better-quality supplies. It has fewer than 6,100 kilocalories a kilogram, according to the Energy Ministry.

Bloomberg