India boosts purchases of Indonesian coal as prices drop – by Clyde Russell (Reuters U.K. – September 6, 2018)

LAUNCESTON, Australia (Reuters) – One of the standout commodity performers this year has been thermal coal, but not all coal is created equal and disparities in pricing may help explain why India’s imports have stayed strong despite the higher costs.

The main benchmark for thermal coal in Asia is priced at Australia’s Newcastle Port, the world’s largest coal-export harbor. The price has gained 11.8 percent so far this year, to close at $114.66 a tonne in the week to Sept. 2, according to assessments by Argus Media.

This isn’t far off the 6-1/2 year high of nearly $120 a tonne hit in July, with the price surge this year largely coming on the back of increased Chinese demand for coal to be burned in power stations.

What has been somewhat surprising is that India, the world’s second-largest coal importer behind China, has defied its prior history of being a price-sensitive buyer and boosted its imports this year.

But delving into the detail offers an explanation as to why this is the case, the price of the bulk of the coal India imports has been declining, especially in recent months.

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