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Australia’s coal prices unfazed by Indonesia’s return

Indonesia’s ban ease in mid-January surprisingly did not hamper Australia’s coal prices

Sources disclosed on 28 January 2022 that the continent’s thermal coal market is expected to see rising interest in the near term. This is despite Indonesia’s easing its export ban, plus Australia’s increasing omicron cases and supply shortage from persistent rains.

Why and how
This came as a surprise for industry observers as many expected Australian coal prices to mellow after Indonesia loosened its export ban on 20 January 2022. When Indonesia suffered critically low inventories in early this year, Australia’s coal value upped as it filled the gap. Some sources revealed the country’s wet weather and omicron spread have limited production at mines, leading to berthing delays at Newcastle.

An Indonesian trader said, “There are supply issues in Australia such as COVID-19 at mines and heavy rains. This has also hampered the ports so there is congestion.” The trader added that Australian coal sellers negotiated long-term contracts with Japan this time of the year and prices remain elevated due to the firm demand.

S&P Global Platts reported the price of Australian 5,500 kcal/kg NAR rose from US$103.50/mt Free on Board (FOB) on 31 December 2021 to US$140/mt FOB on 27 January 2022. Matthew Boyle, Manager for Global Coal, Asia Power and Dry Bulk Freight with Platts Analytics pointed out, “There were rain which impacted logistics, but it is also the end of the summer holiday period, so workforce staff has been on leave. I would argue there is almost no spot coal available anywhere globally at the moment. That is helping to support spot prices at higher levels.”

A quarterly review published by Australia’s Chief Economist’s office projected Australian thermal coal exports to reach 212 million mt in 2022-23. Thermal coal exports stood at 192 million mt in 2020-21. The financial year in Australia runs from July to June. According to a Minerals Council of Australia’s (MCA) report, Australian thermal coal exports have consistently delivered high quality product than Indonesia. That might have also contributed to the elevated prices.

Marine Online News Team
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