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Imported coal prices are on the rise again, and it is unclear if they will subside soon.
On Tuesday, Indonesia’s Ministry of Energy and Mineral Resources set its February thermal coal reference price, also known as Harga Batubara Acuan, or HBA, at $100.69/tonne, up 20.8 per cent year-on-year and 5.4 per cent from January, reported Platts.
The prices (FOB) of 4,200 Kcal and 3,800 Kcal energy value (on ‘gross-as-received’ basis) Indonesian coal – the most popular in India – are up by 10-16 per cent, respectively, at $41 a tonne and $50.30 a tonne, on a year-on-year basis.
Future uncertain
According to Deepak Kannan, Managing Editor, Asia Thermal Coal , prices may hold stable all through the current quarter riding on sustained Chinese demand, coupled with inclement weather conditions in Indonesia.
“Inquiries from China for March cargoes are still strong despite the upcoming Lunar New Year holidays,” he said.
Normally, coal prices plummet during the Chinese New Year holiday season. But this year is an exception. Due to the high domestic prices, Chinese buyers are even bidding for relatively high-value Australian coal.
As a corrective measure, China decided to cap the domestic price of 5,500 Kcal (NAR) coal at 750 yuan as against the current market price of 770-780 yuan. Also there are efforts to allocate more Railway capacity to mitigate the winter demand.
Kannan is clear on the price move beyond March quarter.
However, he said that the end of the Chinese winter demand and rainy season in Indonesia might put downward pressure on prices.
Power plants impacted
Meanwhile, the soaring fuel price in Indonesia (that caters to a chunk of India’s demand for imported coal), coupled with the softening of open market electricity tariff in India over the last three months, impacted viability of imported fuel-based power stations.
According to Girishkumar Kadam, sector head and V-P, ICRA Rating, the variable cost of coastal imported fuel-based power plants reached ₹3.20 per kWh.
The cost will be higher if coal is transported inland. In comparison, the open market round-the-clock average is ruling around ₹3.20/kWh.
Though this is much higher than what it was in the same period last year, it is lower than the IEX average of ₹4.1/kWh in September and ₹4.26/kWh in early October.
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