Indonesia. Around 774mt (million tonnes) are estimated to be
approval of the Indonesian government.
likely to persist for some time. Vessel queues have been growing
during the first quarter of this year.
very heavy rainfall seen this season. Due to the potential impact
not been confirmed.
a price of about US$83.00/t FOB basis 6,700 kcal/kg GAD.
seeking 420kt of coal for delivery during May to July. In March,
Hadong power station for delivery during May and June.
to various Gencos over the coming six months.
Dangjin power station during April 2010 to March 2013. The
4,600 kcal/kg NAR [min]) for delivery during May to June 2010.
for delivery to the Hadong power station. In the first tender,
(min) was required for delivery during April to June. The second
for delivery during the same period. The third tender sought
coal for delivery during April to May and is for 410kt of coal
with specifications including CV 5,500 kcal/kg NAR (min).
Korean steel maker, Posco has settled quarterly contract
deals with the Australians for semi-soft coking coal at a price of
US$167/t FOB. This price for deliveries during the April–June
quarter is more than double last year’s annual contract price and
is close to the price of PCI coal settled recently.
In other Asian markets, exports of Vietnamese coal — mainly
anthracite, have been decreasing this year in line with
expectations that domestic demand would increase in the
coming years and the government would seek to keep more coal
for Vietnam’s own economic growth. Production has been rising
by some 10% year-on-year in 2010 so far while exports have
fallen by well over 10%. Southern China has been the main
market for Vietnamese coal in recent years. Vinacomin was
forecasting coal exports to remain at the same level as last year
in 2010, amounting to 18mt but this level may not be reached.
Total production is forecast to be 43mt this year. Vinacomin is
also understood to have increased the minimum price of export
coal by 31% as export volumes begin to ease amid expanding
domestic demand. Approximately 18mt was exported in 2009
which was a decrease of some 28% compared to 2008.
Malaysia’s TNB Fuel was back in the market in Q1 seeking
two 65kt cargoes of coal for delivery in March. Rumours ahead
of the deadline suggested South African coal was being offered
by traders at about US$79.00–81.00/t FOB basis 6,700 kcal/kg
GAD. This was close to the then prompt spot price and in line
with the quick delivery requirements requested by TNB.
During the first quarter of this year, mining companies
learned that foreign investment in Mongolia’s vast Tavan Tolgoi
coal resource amounting to some 6.5bnt may not be possible
after all. The government is reported to be seeking to retain full
ownership rather than selling up to 49%.
In India, import demand appears to have received a boost
following delays in the approval process for new domestic coal
production. Environmental issues have been delaying a large
number of projects under application by Coal India, amounting
to some 34mtpa of previously planned output in 2012.
Adani is reported to have purchased a cargo of Colombian
coal from CMC. The price was not disclosed, but is likely to have
been low on an FOB basis, and the deal is significant in that it is
the first known cargo of Colombian thermal coal to be shipped
to an Indian customer. Loading was required in April.
Maharashtra Power has also been in the market seeking 3.35mt
of coal for delivery over 12 months starting in April. Karnataka
Power issued a tender recently, seeking 900kt of coal for
delivery to the Raichur power station during April to December
this year. Meanwhile, low ash material was being sought by Udupi
Power for its new power station in Karnataka. Up to 1.25mt of
imported material is required in this tender. Meanwhile, JSW
Energy has been seeking 500kt of Indonesian coal for delivery
during April 2010 to March 2011.
In Indian activity overseas, shipping company, Mercator Lines
is reported to be looking to invest US$100m in coal mines in
Indonesia. Production of up to 10mtpa is planned within five
years. Reports from India indicate that industry leaders believe
the country will face a coal supply shortfall of around 60mt by
2013. During the coming two decades, India’s coal demand
could grow to 2bntpa. Only a quarter of that tonnage is
currently produced domestically.
Although on the other side of the Pacific Ocean, Mexico’s
CFE is rumoured to be planning to come to market seeking
1.5mt of coal for delivery during 2011 and 2013, and this is of
particular interest to suppliers in Indonesia and Australia.
In Australia, the port facilities at Hay Point were closed for
several weeks due to damage sustained during cyclone Ului.
Force majeure was declared by BMA and Macarthur Coal.
Estimates suggest around 2mt of Queensland exports could have
been lost due to Ului, with some 4mt already lost this year due
to adverse weather. The price of coking coal in the spot market
there firmed again to around US$240/t FOB at the time and this
was attributed to the disruptions. The lesser volumes of spot
thermal coal sold in Queensland also rose in price a little.
Around that time, further quarterly contract settlements were
reached for hard coking coal involving Indian steel makers, and
suppliers in Australia, New Zealand and the USA. The BHP
Billiton reference price of US$200/t FOB was accepted. The
price of semi-soft coking coal was also agreed by the Australian
shippers in Korea.
In the coking coal market in Australia during the first quarter,
it appeared that demand for hard coking coal on a spot basis
eased somewhat following the settlement of the first batch of
quarterly contract deals by BHP Billiton and other shippers. This
could be the first indication of an ongoing trend in the market if
such a price structure sustains itself, allowing market players
some new indicators of the likely movements in that spot
market every quarterly period. The fall in the spot price was not
instant on this occasion but took a couple of weeks to move
towards the contract reference price level of US$200/t FOB.
The spot price decreased to around US$210/t FOB from around
US$220/t FOB a week earlier. At the time the first quarterly
contract price was being negotiated, the spot price was reported
to be around US$235/t FOB. Meanwhile, rumours suggest the
price of Queensland PCI coal was being settled on a quarterly
contract basis for about US$170/t FOB. Buyers may also be
agreeable to half-yearly contracts for PCI material. Meanwhile, in
Canada, Teck is reported to have settled the quarterly contract
price for hard coking coal with Japanese customers at US$200/t
FOB. Deliveries are for the April–June quarter.
In Indonesia this year, the government introduced a monthly
coal price reference to be used by producers to price all future
coal sales. The reference is derived from the monthly average of
four prices, with some of those prices actually covering other
countries’ export markets. The first price published was
reported to be US$87.81/t FOB vessel basis 6,700 kcal/kg GAD.
Interestingly, this value was virtually identical to the e-coal.com
Mahakam Spot Price of US$85.50/t FOB barge on 5 March
which has been tracked for more than ten years now, and to our
knowledge was the first regularly published spot price to be
introduced specifically covering Indonesia. Meanwhile, two new
mining regulations introduced in Indonesia recently have paved
the way for investors to obtain new mining permits, and for the
government to offer mining areas to developers. The Indonesian
government has also upgraded its power generation plans with
more than 90 new power plants being proposed for future
development. Around 3,500MW of coal-fired capacity is
anticipated out of a total of more than 10,000MW, but no
construction timetable has been approved yet.
In New Zealand’s coking coal sector, their Indian steel
customers purchased a cargo of Pike River hard coking coal for
delivery last November, but that was delayed. The price is
rumoured to be around US$120/t FOB for this first export
cargo for the miner, which was understood to have been
deferred to be shipped in February. Another 40kt is expected to
be shipped in Q2 through the port of Lyttleton.
At the ports, Australia’s UGL Limited has been awarded the
contract to supply 15 new locos and 160 wagons for
Queensland Rail’s coal haulage expansion in the Hunter Valley.
The first wagons were expected to be delivered in April and the
first locos in December. Coal producers have previously
remarked to e-coal.com about the need for improved rail
infrastructure and rolling stock amid ongoing port improvements
in New South Wales. Vessel delays off the Australian east coast
have reached an all time high following the recent disruptions
due to bad weather, with an average time of 22.9 days being
reported recently. As new infrastructure develops in the Asian
market, Peabody shipped the first cargo of coal through the
Newcastle Coal Infrastructure Group’s new terminal in the last
weekend of March. The 36kt cargo of Wambo product was for a
The gloom of October 2008 now appears to be well in the
past, and our prediction of an improvement in Asian coal trade a
year ago has come true. The growing Asian economies seem
unstoppable and the major coal markets of China and India
continue to be the driving forces on a global perspective.
–––––––––––– Dr Tim Jones is Director of e-coal.com Consultancy and Editor of the
weekly publication Coal Market Intelligence which covers 11 spot
markets worldwide, gives key information on the latest deals and
tenders, company news, people and jobs, industrial relations, and
ports, shipping, and freight rates.