India’s shutdown for Covid-19 cleaves the Asian coal market

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High quality Australian coal prices are holding up, while lower quality Indonesian coal is dropping back, writes Clyde Russell

Launceston — Asia’s seaborne coal market is increasingly diverging between higher quality Australian coal, where prices are holding up despite the economic shock being caused by the coronavirus; and lower quality Indonesian fuel, which is losing ground.

While China has largely contained the virus, it has now spread across the globe, leading to increasingly strong isolation measures in many countries, with the concomitant economic fallout. Indonesia’s coal exports have been in a range about 30-million tonnes in recent months, with China and India accounting for about 60% of the total. At the start of the year, both markets were performing well, with China actually importing more coal during its Covid-19 lockdown, due to the impact on domestic mines and transport infrastructure.

While that figure will rise by the end of month as more cargoes are unloaded, it looks certain that March’s total will be below February’s 7.96-million tonnes and January’s 7.42-million. Plentiful stocks combined with a sharp slowdown in economic activity mean India’s coal imports are likely to slip in coming months, especially from Indonesia.Australia supplies virtually no thermal coal to India, which generally takes Indonesian coal because of its lower cost and cheaper freight rates. Australia’s trade with India is largely in coking coal used in making steel.

 

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