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Some Sumatran thermal coal mines close amid low prices: Sources

A few lower grade thermal coal mines in Sumatra have reportedly shut down as miners have been unable to maintain cash flows amid weak prices and demand, sources said Monday.

Given the lower prices for Indonesian 3,600 kcal/kg GAR coal, some medium-sized miners are shutting down, an Indonesia-based trader said.

He said costs in Sumatra were as high as $30/mt including transportation.

A Jambi, Sumatra-based lower grade coal producer said bid prices from India were coming in sharply lower and many mines were indeed finding it difficult to keep their operations running.


Bids for 3,600 kcal/kg GAR coal were coming in mostly below $30/mt FOB, he said. "The best bid I have seen for this grade was at $28/mt FOB."

"I would not say there is much demand from India, but they are still buying," he said, adding that last week he loaded half of a 3,600 kcal/kg GAR coal cargo onto a Supramax vessel scheduled to sail to India, while a separate miner loaded the other half.

Haulage issues continue to plague Sumatran miners as coal transportation on public roads is not allowed, he said.

He estimated average costs for a 3,600 kcal/kg GAR coal supplier from mine to load port at up to $25/mt, including transportation costs.

"With bids coming in at $28/mt FOB for 3,600 kcal/kg GAR coal, we are working on meagre profit margins of $2-3/mt," he said.

CHINESE BIDS LOWER

Chinese bids for Indonesian thermal coal were coming in sharply lower amid ailing domestic prices, while the Indian market was largely inactive due to a public holiday, sources said.

An Indonesia-based trader said he had received an "exceptional" bid from a Chinese buyer a Supramax cargo of Indonesian 4,700 kcal/kg NAR -- or 5,000 kcal/kg GAR -- coal at $56/mt FOB for prompt loading, but added that he did not have any spot shipments to offer.

"Chinese buyers can otherwise pay only about $55/mt FOB for this grade," he said. He was offering some April-loading cargoes but Chinese buyers were reluctant to enter into deals, he said.

A source at a large Indonesian miner said he was offering Panamax or Supramax cargoes of 4,700 kcal/kg NAR coal at $57/mt FOB for second-quarter loading while bids were at $56/mt FOB for May-June loading.

A Panamax cargo of single-mine Indonesian 4,900 kcal/kg NAR coal was heard to have been sold to a Chinese buyer at $58.25/mt FOB for March loading.

"The price [of $58.25/mt FOB] is on the high side," a Shandong-based trader said, adding that his bid will be no higher than $57/mt FOB.

A second Indonesia-based trader said a major South Kalimantan miner had sold a few Supramax cargoes of 4,200 kcal/kg GAR -- or 3,800 kcal/kg NAR -- coal at $36.50/mt FOB for loading in March. However, Platts could not immediately verify this transaction.

Another Indonesian lower-grade coal producer said he had sold a few cargoes of 3,800 kcal/kg GAR coal to both India and China at $32-32.50/mt FOB for March loading.

He said he was offering Supramax cargoes of 4,200 kcal/kg GAR coal at $39/mt FOB for April loading, but counter bids were not immediately available.

The first Indonesian producer source said he was still hearing offers for Indonesian 5,800 kcal/kg GAR coal at $76/mt FOB, but he expected the "fair value" of this grade to be about $68/mt FOB.

Platts assessed the price for FOB Kalimantan 4,200 kcal/kg GAR coal at $37.25/mt, down 25 cents from Friday, and FOB Kalimantan 3,800 kcal/kg GAR at $32.10/mt, unchanged on the day.

Platts assessed the daily 90-day price for FOB Kalimantan 5,000 kcal/kg GAR coal at $55.50/mt, unchanged on the day and FOB Kalimantan 5,900 kcal/kg GAR coal at $69.25/mt, down 75 cents from Friday.

Source: Platts