Some Indonesian producers were rushing to sell coal at bargain prices to ease excess stocks and catch shipments before the Muslim Eid Al-Fitr festival which could depress prices.

A deluge of supply from Indonesia amid weak demand has sent prices of power-station coal from Australia to 3 1/2-months low.

Thermal coal prices on the globalCOAL Newcastle weekly index, a
benchmark for Asia, edged down $0.67 from the previous week to $66.46 a
tonne on Wednesday on plentiful coal supply from Indonesia, amid a
seasonally low demand period.

Indonesian bituminous coal with a heating value of 6,300 kcal/kg
air-dried basis was offered at around $60 a tonne, FOB vessel, and
around $55 for FOB barge basis, roughly unchanged from last week.

“Demand is still there, but not much,” a regional trader said.

But traders saw demand from China and from other Southeast Asian
countries such as Thailand picking up amid a drop in coal prices.

“China is scouting for bituminous coal with heating value above 6,100
kcal/kg as prices are already low now,” said an Indonesian trader with
a small mine in East Kalimantan in Borneo island, producing about
200,000 tonnes a month.

“We were approached to supply 70,000 tonnes a month to a new Chinese
buyer,” he said, adding that Chinese buyers are looking for shipment
from October onwards.

Some analysts said China’s demand for imported coal could increase
further in coming months, as a recent wave of coal mine closures
triggered by a mine explosion could raise domestic coal prices, making
imports more attractive.[ID:nSYD479754]

There were no physical trades for Newcastle coal registered at the globalCOAL platform this week.

* INDONESIAN SUB-BITUMINOUS

Indonesian sub-bituminous coal with a heating value of 5,300-5,500
kcal/kg (ADB) was offered at around $32 a tonne, FOB vessel for prompt
shipment.

Indonesian producers were rushing to offer their sub-bituminous coal to
ease stocks as production was piling up due to good weather and slow
domestic demand.

“There has been no rain in Kalimantan for the past weeks. Normally,
rains have started at this time of year. This (dry period) allows
miners to boost production,” another Indonesian trader said.

People are also selling off their coal to ease stock before the Eid
Al-Fitr holiday to avoid the risk of fire from self-igniting coal,
which often occurs, traders said. Many Indonesian offices will be
closed from Sept. 18-23 for the holiday.

But plentiful sub-bituminous coal coal supply amid slow demand has put
pressure on spot prices, with buyers able to buy the fuel at below $30
for coal of 5,500 kcal/kg, traders said.

“Buyers have plenty of choice now. I would sell at a bargain if there
were any buyers that are interested in prompt shipment,” the first
Indonesian trader said.

A drop in prices has lured Chinese buyers to buy Indonesia’s cargoes,
the first Indonesian said, adding it has received a request to supply
60,000 tonnes a month of coal of 5,000 kcal/kg gross as-received to a
Chinese buyer.

Meanwhile, Indian buyers had approached Indonesian suppliers for supply commitment to join a government tender.

Source: Reuters

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