NUSA DUA, Indonesia, Sept 11 (Askume) – Asia’s coal industry is none too happy with current market conditions, with miners, traders, shippers and end-users expressing various grievances at the sector’s annual meeting this week.
Export-focused miners in top exporters Indonesia and Australia may be satisfied with their steady output but believe prices for seaborne grades are too low.
The freight industry complains that freight rates are too low, especially considering the shortage of ships in the coming years.
Traders are concerned that profits will be reduced as they seek to maintain trading volumes.
Finally, end consumers in industries such as power companies and cement believe prices remain too high, reflecting the economic crunch across much of Asia, especially China, the world’s biggest coal importer.
Overall, the mood at the Coltrans Asia event in Bali, Indonesia, could be described as one of mutual dissatisfaction.
While this might seem counterintuitive, this could actually be a comforting situation for the coal industry.
Assuming that one of the miners is happy, the result will be that the other players will also be unhappy.
If prices get so high that miners make excessive profits, utilities will feel the pinch.
But if everyone had a reason to complain, the market might be in a more balanced and sustainable state.
Key marine thermal coal prices in Asia are currently stable.
Indonesia’s low-grade coal, which has an energy content of 4,200 kilocalories per kilogram (kcal/kg), closed at $50.38 a tonne last week, according to measurements by commodity price reporting agency Argus.
This is essentially unchanged from $52.23 per tonne the same week in 2023, with prices remaining relatively stable since then, rising only slightly during the northern winter demand peak before fading away.
Australian coal with an energy content of 5,500 kcal/kg, popular with buyers in China and parts of Southeast Asia, closed at US$86.83 a tonne last week, slightly lower than US$90.29 in the same week last year.
The price of 6,000 kcal/kg high-grade Australian coal, bought mainly by power companies from Japan, South Korea and Taiwan, closed at $143.64 a tonne last week, the highest level in recent times, according to data compiled by GlobalCoal There.
The market is not expected to change much, with the GlobalCoal 6,000 kcal/kg coal forward curve remaining roughly flat for the rest of the year, rising only slightly in the first half of 2025.
Plane volume
It was a similar story for seaborne coal volumes, with shipments from top exporter Indonesia steady, with little change due to seasonal demand variations.
Data compiled by commodities analyst Kpler showed Indonesia exported 43.09 million tonnes of coal of various grades in August, up marginally from 41.16 million tonnes in the same month in 2023.
Second-placed Australia performed strongly in August, exporting 33.39 million tonnes, the highest level since December.
However, Australia’s exports in 2024 are expected to remain the same as in 2023 at 354 million tonnes.
Stable prices and export volumes may not please everyone, but they help keep the coal industry afloat and provide confidence in investment decisions.
But if there is one factor that worries almost everyone in the industry, it is China.
China’s import demand has been strong and this year’s imports are expected to exceed last year’s record of 474.72 million tonnes.
China imported 45.84 million tonnes in August, up 3.4% from the same month last year, according to official data.
In the first eight months of this year, my country imported 341.62 million tons, an annual increase of 11.8%.
Some coal market participants worry that China’s strong performance may be coming to an end, given the growth of domestic hydropower and renewable energy generation and production.
Indeed, China is likely to continue to import relatively large quantities of coal as seaborne market prices remain competitive with domestic supplies.
Beijing officials are also happy to leave the coal industry to market forces, believing cheaper prices from the sea will help curb the domestic market.
The views expressed in this article are those of the author, a Askume columnist.
The views expressed are those of the author. They do not reflect the views of Askume News, which is committed to integrity, independence and non-partisanship in accordance with the principles of trust.
