Jakarta, CNBC Indonesia – Coal prices are very volatile this week. However, overall, the black sand strengthened quite sharply during the week.
In the last trade this week, Friday (21/4/2023) the price of coal for the May contract on the ICE Newcastle market closed at US$ 189.35 per ton. The price has fallen 2.52%.
Overall, coal prices rose 4.61% this week. Strengthening as well as destroying the bad record of coal in the previous week which sank 10.95%.
During the five trading days last week, coal prices strengthened twice, weakened twice, and remained stagnant once.
On Wednesday this week, the price of black sand jumped 7.4% a day after China reported a surge in imports.
Developments in China are still the main driver of coal this week. Indonesia’s export limitations due to the long Eid holiday have also boosted the black sand market.
China reported two positive developments this week, namely their booming economy and imports in March.
China’s economy shot up 4.5% (year on year/yoy) in the first quarter of 2023, from 2.9% yoy) in the fourth quarter of 2022.
On a quarterly basis, China’s economy grew 2.2% in the first quarter of 2023 or much higher than in the fourth quarter of 2022 which recorded 0.6%.
China is the world’s largest coal consumer. With the soaring economy, the demand for coal is expected to increase so that prices can be raised in the future.
Moreover, China’s industrial activity has also begun to recover. China’s industrial production shot up 3.9% (yoy) in March 2023, compared to 2.4% (yoy) in January-February.
The Chinese Customs Office also reported that China’s coal imports in the first quarter of 2023 reached 101.8 million, a 96% increase compared to the same period.
During March alone, China’s coal imports reached 41.17 million tonnes, up 151%. This number is the highest since January 2020 or pre-pandemic.
The surge in imports was due to increased demand, particularly to Australia. After the import emargo was opened, Chinese businessmen have been busy buying coal from Australia.
The opening of borders and the easing of Covid-19 policies also increased demand.
China imported 2.22 million tonnes of Australian coal last month consisting of 1.93 million tonnes of thermal coal and 284,990 tonnes of coking coal.
About 5 million tons of Australian coal is expected to reach China in April.
Coal imports from Russia totaled 8.84 million tonnes last month, higher than the average of 7.4 million tonnes in the first two months of this year.
Meanwhile, Indonesian coal arrivals in March more than doubled from the previous year to 21.98 million tons.
This is because traders increase purchases ahead of the fasting month when coal production and transportation usually slows down.
Previously, S&P Globel also explained that Asian buyers would buy coal from Indonesia in anticipation of the long Eid holiday.
“Indonesia’s coal production may drop considerably in mid-April due to the end of Ramadan,” wrote S&P.
The Indonesian Eid holiday will take place on 19-25 April 2023.
Apart from limited mining activities, the long holiday will also affect transactions and loading and unloading at the port.
MODI data from the Ministry of Energy and Mineral Resources shows that coal production reached 205.33 million tons as of April 22, 2023.
CNBC INDONESIA RESEARCH
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