Thermal coal at Newcastle port in Australia, an Asian benchmark price, won’t fall below $70 a metric ton, a level already close to the cost of producing and transporting coal, traders said yesterday at a Bali conference.
“Production costs have gone up,” Michael Soerijadji, PT Adimitra Baratama Nusantara’s marketing director, said at the conference. “It’s really difficult to see prices going below $70 for sustainable periods of time.”
The price at Newcastle has fallen nearly 15 percent this year, according to data from globalCOAL, a London-based data provider and trading platform. Prices for the power-station fuel are $72.74 this week, it said.
Prices are getting very close to production costs for Indonesian producers, said Edwin Tsang, marketing director at PT Adaro Indonesia. The unit of PT Adaro Energy is Indonesia’s second-largest producer. Further cuts in prices are “very unlikely,” he said.
India, China Demand
China’s imports this year will be 5 million to 10 million tons more than last year, according to Ben Burgess, director of Avra Commodities, and Hartono Widjaja, head of sales at PT Indo Tambangraya Megah, a unit of Thailand’s Banpu Plc. “ Where else do you come if you can’t put your tonnage to Taiwan, Japan and Korea? You go to China,” Burgess said at the conference. Chinese demand for imported thermal coal has peaked, Goldman Sachs analysts including Christian Lelong said in a note on May 23. Demand growth will come from India, Taiwan and Korea, he said
India’s coal consumption is still growing, Sreejith Chalakkal, PT Bayan Resources’s marketing manager, said at the conference. “The biggest challenge to India’s demand growth will be the power policy and how the new Indian government is going to handle inflation by changing the power tariff,” Chalakkal said. “If that’s able to be tackled and there’s change in the power policy and an increase in tariffs, there will be a lot more coal buying.”
By Fitri Wulandari (fwulandari@bloomberg.net)