With the Indonesian thermal coal costs surging, Coal India (CIL) is seeking at an chance to replace imported thermal coal with the domestic range going by the government’s mandate of one hundred million tonne (MT) of import substitution.
In the wake of the Indonesian government setting the November typical cost-free on board (FOB) coal costs at $55.71 per tonne, up 9.2% from October’s FOB worth, CIL has began speaking to importers to uncover if they could meet their requirement by means of domestic coal. “We have already communicated with 300 importers seeking their requirement from domestic sources. The rising international coal prices in the last fortnight could offer CIL an opening,” a CIL official stated.
The PSU miner, saddled with a stock pile of 91 MT in the method (53.5 MT at the pit heads and 37.5 MT at the energy plants), is seeking for newer avenues to push coal. Though demand from the energy sector abruptly improved above 13% in October, it declined when once more in November, and non-energy gave the impetus lifting 12.3 MT, a development of 46% y-o-y. This helped CIL’s y-o-y offtake to develop 8% in November. Substituting imports could additional help in offtake development even if demand from the energy sector remains muted.
Indonesian coal costs (FOB) at $ 67.09 per tonne in March this year slumped to its lowest at $49.42 per tonne in September this year, for which imports had been upbeat in spite of the government’s efforts to bring it down. Although the Indonesian typical coal costs for November, according to a Platts report, had been down 15.1% y-o-y, contemplating the current price tag trend the mark up in November has opened possibilities for CIL.
Indonesian coal costs are bound to move up additional from December onwards as there are improved demand from China, Japan and South Korea. Besides the sky rocketing ocean freights could place importers at a disadvantage, which is exactly where CIL is attempting to capitalise.
CIL’s particular spot e-auction for coal importers has been enouraging with 3.3 MT booked in November, fetching a premium of 21% against 14% in October. The quantity booked in November is twice that of 1.6 MT booked in October, when CIL for the initial time introduced this window. So, targeting importers has yielded in e-auction sales with general sales expanding 77% among April and November. The 5 auction windows booked a total of 68.3 MT, which was 30 MT larger compared to the year-ago period.
Non-energy customers booked 17.4 MT from the exclusive auction, generating 25.5% of the total allocated quantity for November. Bookings from non-energy customers rose 262% for April-November against 4.8 MT a year ago.
During November, e auction volume bookings had been at 9.4 MT, clocking a 23.7% development y-o-y, but it also fetched a 30% premium more than the notified costs, a large leap from the 13% premium fetched in October.
“Considering the market response to e-auctions, there is a strong possibility that the bookings could go over 100 MT in the current fiscal. For now, the focus remains on volume expansion. Going forward, add-ons on the notified price in case of e-auctions will be pliable based on subsidiary-wise and grade-wise demand,” a senior CIL executive stated.