Production cuts at Indonesian thermal coal mines could only at best help stabilize prices but further gains would be capped by sagging demand from both India and China in the spot market, sources said Wednesday.
A Singapore-based trader said reports of Indonesian thermal coal miners trimming their production to combat low prices could only help stabilize prices at best, with only a handful of deals being reported.
And a Singapore-based broker said production would have to be cut significantly in order for there to be any "meaningful impact" on prices.
A producer based in Indonesia said miners have reduced production over the last three to four months because they are not seeing much demand from India and China and prices have been "substantially the same."
He said they have just closed a deal for a geared Supramax shipment of 4,200 kcal/kg GAR at around $37/mt FOB, with the cargo already heading to east coast India.
A second Singapore-based trader said he heard a deal for a June-loading Supramax cargo of 4,200 kcal/kg GAR concluded at $37.90/mt FOB.
A gearless Panamax of 4,200 kcal/kg GAR for June loading is being offered at $38.50/mt FOB as heard through energy broker Ginga Petroleum, but bids from India are at $37/mt FOB.
A third Singapore-based trader placed the fair price of 4,200 kcal/kg GAR at $37.25-37.50/mt FOB, geared Supramax basis. He added that he has not seen much demand for 3,800 kcal/kg GAR.
"If there are distressed cargoes of 4,200 kcal/kg GAR in the market, why would buyers go for 3,800 kcal/kg GAR or even 3,600 kcal/kg GAR?" he said, referring to the distressed Supramax cargo of 4,200 kcal/kg GAR reportedly sold to an Indian buyer at $36.50-37/mt FOB.
The trader also said he is getting offers for a geared Supramax cargo of 3,400 kcal/kg GAR for prompt loading at $25.25/mt FOB.
The first Singapore-based trader said they had placed the fair market value of 3,800 kcal/kg GAR at $31.50/mt FOB last week, but "this price could further come under pressure."
MONSOON AFFECTS DEMAND
The third Singapore-based trader said that, with the Indian general elections finally over, "the main factor affecting Indian demand at the moment is the monsoon."
An India-based buyer said some power plants also schedule their maintenance during the monsoon season, which contributes to weaker demand from India.
A Thailand-based trader said the offer price for a June-loading Supramax cargo of single mine 5,000 kcal/kg GAR is around $56-57/mt FOB.
According to the Singapore-based broker, there has been scant buying interest for 5,000 kcal/kg GAR in China.
Meanwhile, offers from Indian traders have dropped to $55.75/mt FOB or even lower for June-loading gearless Panamax cargoes of this grade and bids are at about $54.75-55/mt FOB, the source said.
The third Singapore-based trader said the offer price for a June-loading geared Supramax cargo of blended 5,000 kcal/kg GAR is at $54-54.50/mt FOB and buying interest in India is at $52/mt FOB, while a Supramax parcel of single mine 5,000 kcal/kg GAR, also for June loading, is priced at $55/mt FOB and bid at $53.50/mt FOB.
The first Singapore-based trader placed the fair market value of 5,900 kcal/kg GAR at $68/mt FOB, geared Supramax basis.
Platts Wednesday assessed the price of FOB Kalimantan 4,200 kcal/kg GAR coal at $37.50/mt and FOB Kalimantan 3,800 kcal/kg GAR at $31.50/mt, both unchanged from Tuesday.
Platts assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $56/mt, unchanged from Tuesday, and FOB Kalimantan 5,900 kcal/kg GAR coal at $67/mt, up by 10 cents on the day.
