In just half a month, the domestic thermal coal market has entered a new stage. In the international seaborne coal market, downstream players have entered a wait-and-see mode one after another, and purchases of Indonesian coal have also been put on pause.
At the end of October, facing the sudden sharp price drop in China's domestic coal market, the seaborne market saw bleak trading. Indonesian miners worried that the fall in Chinese coal prices could be detrimental to them, but some remained relatively optimistic, believing the price adjustment was only temporary. One Indonesian miner said: "At least from the producer's perspective, many Chinese power plants still have procurement demand, so prices may see some pullback, but the magnitude is limited." Despite some remaining inquiries from China, market uncertainty kept producers holding on to their last few cargoes. They were not in a hurry to sell, as they had very few December-loading cargoes available; only those still holding November cargoes were eager to offload them. For Indonesian coal at Kalimantan port with 4200 kcal, the FOB price briefly stabilized around $155-158/ton, then slightly declined to $141/ton on October 29.
Entering November, the decline in Indonesian coal prices widened, falling by $10/ton for three consecutive days. As of November 3, the FOB price for 4,200 kcal coal at Kalimantan port was $109.95/ton. Some Chinese buyers and traders renegotiated deals, requesting deferred payment or delivery, forcing Indonesian miners to readjust loading schedules. Meanwhile, heavy rains in Kalimantan severely affected production at small and medium-sized mines, as workers had to pump water from open-pit mines before continuing operations. For the seaborne market, miners' sentiment is no longer optimistic. Considering that supply remains tight due to weather effects, they expect export prices may rebound slightly by the end of November, but they will not return to historical highs.
Under current market conditions, concluding deals at fixed prices is very risky, so everyone is waiting. An Indonesian trader believes the price correction was long overdue, calling it “a bubble that has been waiting to burst.” Another miner said they are re-establishing more appropriate quotation levels.
For buyers in the Philippines and Vietnam, the downward price trend is a positive signal, but since export prices remain beyond the affordability of most buyers, no agreements have been reached yet. Indian buyers have also stayed out of the market, partly due to the Diwali holiday and partly because they are waiting for further cooling of prices. According to data from India's Central Electricity Authority, on November 1, coal inventory at Indian power plants further increased to 10.96 million tons, with an average availability of 6 days. The number of plants with availability of no more than 3 days decreased from 60 a week earlier to 47.
In addition, Indonesia's Ministry of Energy and Mineral Resources set the maximum FOB price of the thermal coal reference price (HBA) for the cement and fertilizer industries at US$90/ton from November to next March, while the price ceiling for Indonesia's state power company PLN remains at US$70/ton. This year, due to tight global supply and strong demand from China, Japan, South Korea and others, although prices have fallen recently, export prices remain high. Miners said: “We have fulfilled our domestic obligations and there is no need to supply cement plants and fertilizer plants at lower prices. Companies prefer to export; sales to domestic cement and fertilizer plants should also be conducted at market prices, otherwise the cap on the reference price should be raised.” According to Platts data, the average FOB price of Indonesian 5,900 kcal/kg thermal coal in October was US$198.57/ton.
