A worker shovels coal into a supply truck at a yard on the outskirts of Ahmedabad, India, October 25 , 2018.
The Australian Thermal Coal Price Benchmark, the weekly Newcastle Index, as assessed by Argus, the commodity price reporting agency, slumped to $48.14 per tonne in the week of June 26, the lowest since then.
November 2006 and down 31 percent from the peak of $69.59 this year in mid-January.
The price of low-quality Indonesian coal with an energy content of 4.200 kilocalories per kilogram ended last week at $23.89 per tonne, the lowest since the start of Argus’ assessment in August 2008.
In some ways, it is not surprising that Indonesian coal has been hit hard, given its main market, India, where imports have been collapsing.
India’s imports of coking and thermal coal in June are on track to be the lowest since Refinitiv began assessing vessel tracking and port data in January 2015.
Only 8.08 million tons of coal had been discharged or had been discharged by 29 June, according to Refinitiv data.
While this may still increase when cargo is included on the last day of the month, the total is likely to be well below 10.3 million tons in May, which was significantly lower than the average of 17.05 million tons in the first four months of 2020.
India has imposed a series of lockdowns to combat the spread of the novel coronavirus, which has reduced electricity demand, with coal-fired generation taking the brunt of the blow as it struggles to compete with cheaper renewable energy supplies.
While India ‘s economy is expected to begin to recover in the coming months, it may take some time for coal imports to recover, especially given the government ‘s ongoing policy to eliminate the bulk of imports in favor of domestic supplies.
India’s imports of Indonesian coal amounted to 3.1 million tons in the first 29 days of June, according to Refinitiv, the lowest since the start in 2015 and less than half of the 8 million tons reported in February, the strongest month of this year.
Australia, which supplies coking coal almost exclusively to India, has also seen its volume decline, with India importing 1.56 million tons to 29 June, down from the peak of 3.7 million tons in January this year.
Coking coal prices also suffered, with Singapore Exchange contracts ending at $111.43 per tonne, slightly up from the recent low of $106 on June 1, which was the weakest since August 2016.
CHINA, JAPAN, SOUTH KOREA
If India is a depressing region for the coal exporters in the region, the developments in most of the other major markets are unlikely to be applauded.
China, the world’s largest producer, consumer, importer or coal, is likely to see declining imports in the coming months, as it is believed that the authorities are urging traders and end-users to restrict the purchase of overseas cargoes in order to ensure that domestic prices are high enough to make the mines profitable.
There is already some evidence of slowing imports, with data from Refinitiv showing that 22.65 million tons had been discharged from ships in the first 29 days of June, putting full-month sea-borne imports on track similar to 23.28 million in May.
However, June’s total is likely to be well below China’s sea-borne imports of 26.06 million tons in June 2019.
Japan, Asia’s third-largest coal importer, saw imports hold steady in the first five months of the year, with official data showing total imports of 75.27 million tonnes.
However, Refinitiv data shows that Japan’s imports for the current month have so far been 11.5 million tonnes, down from 12.6 million in May, and are also on track to be the lowest monthly total since the start of Refinitiv data in January 2015.
South Korea, the fourth-largest importer, unloaded 7.3 million tons with one day left in June, down from 8.83 million in May and well below 9.08 million tons since June last year.
Overall, both thermal and coking coal are currently being slammed in Asia by a combination of protective policies in China and India, weak demand for coronavirus pandemics, and an element of seasonal weakness in the shoulder season between the winter and summer peaks.
While the economies of the region should gradually pick up, there is an element of structural change in China and India that is bearish for sea-borne markets.
