Bearish sentiment blanketed the Indonesian thermal coal market Wednesday amid reports of price discounting by major Chinese coal producers to their domestic customers, said traders.
A medium-sized Indonesian coal producer said he expected Kalimantan thermal coal spot prices to soften following the announcement of the Chinese price discounts, in some cases amounting to Yuan 20/mt on domestic coal.
Price-discounting was expected to translate into lower Chinese bids for Indonesian thermal coal in the weeks ahead, said a second medium-sized coal producer in Indonesia.
Buyers in China and India were still bidding for Indonesian coals, but negotiations have slowed to a very pedestrian pace because of a gap in buyers' and sellers' price expectations, he said.
The second coal producer said he was close to finalizing a deal for coal from a single mine in East Kalimantan at $65/mt GAR on a gearless Panamax vessel for loading later in March.
A third coal producer said he has been able to close a deal this week in India for around 40,000 mt of South Kalimantan coal from a single mine.
The cargo has a calorific value of 4,200 kcal/kg GAR and was priced at $39/mt FOB on a geared Handymax vessel basis for March loading.
Many traders active in the Indonesian thermal coal market were on their way to a coal industry gathering in Goa, India, and were unavailable for comment.
Another deal in India involved 3,800 kcal/kg GAR South Kalimantan coal from a single mine on a geared Handymax vessel at $32.50/mt FOB for March loading.
A Singapore-based market source said Indonesian coal prices would continue to trade in a range-bound fashion because of the price discounting in China.
Sources in the market said Chinese coal producers Shenhua, China Coal and Datong have offered significant price discounts to domestic buyers.
The third Indonesian coal producer said he believed the Chinese price-discounting will be short-lived.
While Kalimantan coal export prices were expected to weaken in the meantime, the price drop was not likely to be huge, he said, as he estimated the discounts offered by the Chinese at only about 4%.
"A 4% drop in prices will not hurt us too much," said the Indonesian coal producer.
A Beijing-based trader recently booked a 50,000 mt cargo of 3,400 kcal/kg NAR branded Indonesian coal at $40.50/mt CFR South China for April arrival.
Platts assessed the price for FOB Kalimantan 4,200 kcal/kg GAR coal at $38.25/mt, up 25 cents on day, while FOB Kalimantan 3,800 kcal/kg GAR was assessed at $32.25/mt, and steady on the day.
Platts assessed the daily 90-day prices for FOB Kalimantan 5,000 kcal/kg GAR coal at $56.30/mt, unchanged from Tuesday, while FOB Kalimantan 5,900 kcal/kg GAR coal was assessed at $69.80/mt, down 30 cents on the day.
