A slight recovery in prices for Indonesian-origin thermal coal is expected by some traders once Jakarta's new export licensing regime takes effect on October 1 and after India's Supreme Court this week declared void around 200 mining permits for domestic thermal coal, market sources said Thursday.
"The export license regulation is really a big problem as the market is still unclear about it," a Singapore-based trader said.
The new licensing regime for coal exports is likely to lead to firmer market prices as it will possibly block product from a number of illegal mining operations in Indonesian coal fields, thereby reducing available supply for export.
"Once the supply tightens, prices are sure to get better," a trader based in Indonesia said.
The trader said a majority of Indonesian miners that had received their export licenses were producers of 4,200 kcal/kg GAR and higher-grade coal.
At present, he said he knew of 36 companies that had already secured export licenses, and he received news that another 15 companies had been granted licenses.
With around 51 companies all set for the new licensing regime on October 1, he expressed doubt that the government would consider postponing the implementation date a second time as was the case in August.
An India-based trader said there was considerable market speculation on "what will happen after October 1 deadline," and that Indian end-user buyers were still quoting low prices.
For instance, while Indian buyers were bidding at around $50/mt FOB for single mine, low sulfur cargoes of 5,000 kcal/kg GAR Kalimantan coal, offer prices had risen to around $54-55/mt FOB.
INDIA VOIDS DOMESTIC MINES
A potentially bullish demand factor for Indonesian thermal coal exports arrived this week in the form of the Indian Supreme Court's decision to declare void 214 mining concessions for domestic thermal coal.
A second India-based trader gave an uncertain reaction to the Indian court ruling saying. "We are observing the market for a clearer picture," he said.
October-loading Supramax cargoes of Indonesian 3,800 kcal/kg GAR coal were offered at $29.50/mt FOB levels, he said.
"There are some offers, but suppliers are not very aggressive as they expect the prices to move up post the implementation of the license regulation in Indonesia," the trader said.
Supramax cargoes of of 4,200 kcal/kg GAR Indonesian thermal coal for loading in October were heard being offered at $36-37/mt FOB Kalimantan to buying interest at just under $36/mt, several sources said.
A third India-based trader said he had sold a Supramax cargo of 4,200 kcal/kg GAR Indonesian coal at $37/mt FOB for October loading, and he was now offering a similar cargo at $38/mt FOB.
Prices had gone up and they might move up further after October 1, he said, adding that some traders were holding back their cargoes in expectation of a price rise in the coming days.
The trader detected a shortage of 5,000 kcal/kg GAR cargoes and he pegged the price on a geared vessel basis around $52-53/mt FOB for blended material.
He said 5,900 kcal/kg GAR Indonesian coal was priced around $62-63/mt FOB, but there were limited buyers in India for this type and grade.
Platts assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $50.60/mt, up 20 cents from Wednesday, and FOB Kalimantan 5,900 kcal/kg GAR coal at $63.60/mt, up 10 cents.
Platts assessed the price of FOB Kalimantan 4,200 kcal/kg GAR coal at $37/mt and FOB Kalimantan 3,800 kcal/kg GAR at $30.50/mt, both up 20 cents on day.
