Indonesian coal prices strengthen further
Indonesian physical thermal coal prices increased again on 17 January, after Chinese buyers were forced to raise their bids in attempt to secure cargoes in a tightly supplied market.
Rain is still causing delays to vessel and barge loading operations in parts of Kalimantan, which is curbing supplies. And some suppliers may be holding cargoes back from the market amid expectations that prices could increase further in the run-up to next month's lunar new year holiday in China, which is exacerbating the supply tightness. January-loading cargoes are now all but sold out, while early February-loading shipments are also said to be tight.
Deal prices for February-loading geared supramax vessels of GAR 4,200 kcal/kg (NAR 3,800 kcal/kg) coal have risen as this week has progressed. Trades involving this type of coal were concluded on 17 January at $32.75-33/t, which was up from similar deals a day earlier at $31.70-32.75/t and another shipment on 15 January that changed hands at $31.75/t. Offers have also increased this week, with February-loading cargoes available at around $33-34/t, with bids from Chinese buyers at around $32/t.
By comparison, a cross-month late January/early February-loading supramax cargo changed hands last week at $31.20/t, with an early February-loading shipment trading at the slightly higher price of $31.25/t. Other trades involving this type of coal were concluded at $30.40-30.60/t.
Argus last assessed fob GAR 4,200 kcal/kg cargoes on 11 January at $31.13/t, up by 79¢/t from the previous week.
Bids are also increasing in the ICI 4 derivatives market, which clears on the CME. January ICI 4 contracts were bid at $31.75/t on 17 January, up from $31.60/t a day earlier, with an offer at $32.50/t, up from $32.25/t. There were further signs that the market is also strengthening further along the curve, with February and March contracts both bid at $34.25/t. No ICI 4 trades were cleared by the CME, after 5,000t of January contracts traded on 16 January, which took the total volume cleared on the exchange so far this month to 70,000t and the total volume since the contract launched in February last year to 1.83mn t.
Elsewhere in the Indonesian market, fob prices of mid calorific value (CV) coal are being pushed up by strong demand from India. A particularly low-sulphur February-loading geared supramax, which was sold basis GAR 5,000 kcal/kg to a southeast Asian buyer, changed hands at $52.95/t, although Argus only assesses gearless Panamax shipments for this type of coal. This was considered above current market levels by some traders, who noted that a February-loading shipment of GAR 5,100 kcal/kg coal traded at $52/t, while offers of this type of product were heard at $53/t. Argus last assessed fob prices for GAR 5,000 kcal/kg coal at $48.36/t on 11 January, up by $1.21/t from the previous week.
The low CV market is also showing signs of strengthening this week. A February-loading geared supramax cargo traded at $20/t. By comparison, trades involving the type of coal were concluded last week in a $19-19.50/t range.
In the Australian seaborne coal market, another 100,000t of coal changed hands as the focus shifted to March-loading shipments, bringing the confirmed transaction volume for the week to over 700,000t.
One 50,000t shipment of NAR 6,000 kcal/kg coal with a minimum traded on-screen for $100.50/t fob Newcastle. March cargoes have already traded several times this week at that level, which is up from the Argus-assessed price of $96.77/t fob Newcastle on 11 January for NAR 6,000 kcal/kg coal, assessed with a slightly lower minimum of 5,700 kcal/kg.
A NAR 5,500 kcal/kg cargo of the same size also traded on-screen for $61.50/t fob Newcastle. The shipment represented one of the first March trades in a market that has been dominated by month-ahead deals.
In the China domestic market, more producers in Shaanxi raised fob mine prices, which supported fob port prices. Offers of NAR 5,500 kcal/kg coal were at 590-595 yuan/t today. But utilities remained quiet as power demand is set to slow soon with the arrival of the lunar new year holiday period. Still, stronger asking prices suggested a rise from Argus' last assessment, on 11 January, of Yn586/t fob Qinhuangdao ($86.60/t).
In China's futures market, the May contract on the ZCE closed at Yn583.8/t, up by Yn1.6/t on the day.
Related news posts
Draught limits tighten on lower Mississippi River
Draught limits tighten on lower Mississippi River
Houston, 23 September (Argus) — The US Coast Guard (USGC) placed further restrictions on traffic on the lower Mississippi River as water levels continue to deteriorate. The USCG on 22 September announced that all northbound traffic cannot have draught deeper than 9.5ft from Tunica, Louisiana, to Greenville, Mississippi. For Greenville to Tiptonville, Mississippi, barges must remain above a 9ft draught, the shallowest draught channel allowed for the lower Mississippi River by the US Army Corps of Engineers. All northbound transit also cannot load more than four barges wide or configure more than five barges wide. Southbound traffic from Tiptonville to Greenville cannot be more than six barges wide or deeper than 9.5ft. Greenville to Tunica southbound barges can load as deep as 10ft but cannot be more than seven barges wide. All locations between Cairo, Illinois, and Greenville fell back to their low water threshold over the weekend as rainfall from Hurricane Francine flowed down the river. More grain has moved downriver this year compared with last year as the US Department of Agriculture (USDA) expects higher US grain exports in the 2024-25 marketing year. Around 367,000 short tons of grain moved for the week ended 14 September, which is about double the same period a year earlier, the USDA said. Both south and northbound movement is expected to see a heavier pace in October. By Meghan Yoyotte Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan pushes abatement approach to energy transition
Japan pushes abatement approach to energy transition
Tokyo, 23 September (Argus) — Japan is keen to promote its energy transition approach, focused on carbon abatement technologies, to the wider coal-reliant Asia-Pacific region. The country has accelerated development of carbon abatement technologies to keep fossil fuels in its energy mix and boost energy security and economic growth. Japan, with its G7 counterparts, pledged to phase out "unabated" coal-fired plants by 2035, or "in a timeline consistent with keeping a limit of a 1.5°C temperature rise within reach, in line with countries' net zero pathways". This is a major step for Japan, a resource-poor country. But legislative progress aimed at developing value chains for carbon capture and storage (CCS) and cleaner fuels, such as hydrogen and ammonia, might have encouraged Tokyo to commit, especially since the G7 text allows for some wiggle room. To ensure continued use of its abated thermal power plants, trade and industry ministry has requested ¥11.2bn ($79mn) to support CCS projects, including exploration of CO2 storage sites, for 2025-26, up sharply from the ¥1.2bn budgeted for 2024-25. Japan has yet to set a date to achieve the phase-out target. But it had already promised not to build new unabated coal-fired plants at last year's UN Cop 28 climate talks, while pledging to phase out "inefficient" coal-fired plants by 2030. Less than 5pc of Japan's operational coal fleet has a planned retirement year, according to analysis by Global Energy Monitor, and these might comprise the oldest and least efficient plants. Coal capacity built in the last decade, following the Fukushima-Daiichi nuclear disaster, is unlikely to receive a retirement date without a countrywide policy that calls for a coal exit. Japan's coal demand could decline, to some extent, under global divestment pressure. But the fuel remains key, as the government sees renewables and nuclear as insufficient to meet rising power demand driven by the growth of data centres needed to enable artificial intelligence. Continental divide The country is keen to extend its vision for "various" and "practical" pathways, including abatement technologies, to coal-reliant southeast Asia. This stems from Tokyo's sceptical view about promoting a more European approach to the energy transition — driven by wind and solar power — to Asian countries. Japan stresses the importance of more diversified pathways, including thermal power with abatement. The country aims to spur decarbonisation in Asia-Pacific through a platform called the Asia Zero Emission Community (Azec) initiated in 2022. Asia-Pacific accounts for more than half of global greenhouse gas (GHG) emissions, at 17.178bn t of CO2 equivalent, according to the IEA. In Jakarta last month, 11 Azec countries emphasised the need to co-operate "to decarbonise coal power generation". The platform sets out options such as biogas, hydrogen and ammonia, and retrofitting with CCS and carbon capture, utilisation and storage. Japan's industries have already committed to carbon abatement at coal-fired plants in Asia, leveraging their technological know-how. Tokyo has pledged to provide about $70bn to support decarbonisation globally. This funding is part of wider financial assistance to help mobilise the estimated $28 trillion that Asia requires. To secure the funding, Japan has already issued part of a $139bn climate transition bond and aims to strengthen the financial support through the Asia Zero Emission Centre, the latest Azec initiative, under which transitional finance will be studied further, a trade and industry ministry official told Argus . Japan is on track to reduce its GHG emissions by 46pc by the April 2030-March 2031 fiscal year from its 2013-14 level, and hit its net zero emissions goal by 2050. By Motoko Hasegawa and Yusuke Maekawa Japan CO2 emissions by sector Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
ADB grants Indonesia $500mn energy transition loan
ADB grants Indonesia $500mn energy transition loan
Singapore, 23 September (Argus) — The Asian Development Bank (ADB) has approved a $500mn loan to support Indonesia's energy transition through the Affordable and Sustainable Energy Transition programme. The programme aims to establish a policy and regulatory framework for a clean energy transition, strengthen sector governance and financial sustainability, and ensure a just transition towards net zero. Indonesia has set a target to reach net zero by 2060, but is heavily reliant on fossil fuels, which accounted for 80GW, or 86pc of total power generation capacity in 2023, according to a report by energy think-tank Ember. The country's renewable growth capacity has also been slow, with only 3.3GW of renewables added over 2018-23, bringing the total share of renewables to 13GW as of 2023. On the contrary, the country added 26GW of fossil fuel capacity over the same period, according to Ember. "This policy-based loan programme supports Indonesia's foundational and co-operative policy development to identify and address the sector's complex challenges to accelerate its shift towards sustainable energy," the ADB's country director for Indonesia, Jiro Tominaga, said. One of the main measures of the programme is to develop a Comprehensive Investment and Policy Plan (CIPP). A draft CIPP was published in November last year and it serves as a framework for the Just Energy Transition Partnership (JETP). Indonesia in 2022 entered the JETP, a financing mechanism through which it is supposed to receive $20bn from international partners like the US, EU, Japan and Canada to phase out coal and increase the share of renewables in its energy mix. But the JETPs have been long on promise and short on implementation, and need to be scaled up to be effective, according to a research report . Indonesia could need up to $12 trillion until 2050 to finance its energy transition away from coal , and the lack of additional financing could slow down the uptake of cleaner energy. Other measures under the programme include regulatory improvements to scale up renewable energy capacity and initiatives to strengthen the capacity and governance of state-owned energy firms. The ADB is working with French public financial institution Agence Francaise de Development and the German Development Co-operation through German bank kfW as co-financing partners "to support the government's leadership in energy transition," the ADB said. More details on how the funds will be used were not disclosed. The Asia-Pacific region holds significant investment opportunities in the energy transition. It needs at least $1.1 trillion/yr in climate financing, but actual investment falls short by at least $815bn/yr . The ADB estimated its investments in the region to have amounted to $10.7bn in 2023. By Prethika Nair Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Indonesian Sumsel 1 coal-fired unit eyes December start
Indonesian Sumsel 1 coal-fired unit eyes December start
Manila, 18 September (Argus) — The first 300MW unit of the 600MW Sumsel 1 mine-mouth coal-fired power plant in Indonesia's south Sumatra province is scheduled to begin commercial operations in December following several years of delays. The plant, which is located in Muara Enim regency, is being developed by China Shenhua Energy and Lion Power Energy, which have 75pc and 25pc respective stakes in the project. Once fully operational it is expected to consume around 2-3mn t/yr of coal. Lion will be responsible for sourcing the coal. The $750mn plant is part of Indonesia's 35GW power generation roadmap developed by the Indonesian government in 2015. The project was contracted to China Shenhua Energy in 2016. The first unit at the plant was originally scheduled for completion by 2020. But land acquisition delays and the Covid-19 pandemic and resulting restrictions on the movement of people and travel bans delayed construction, Lion said. Construction work on the plant structure is now in the final stages and operational testing is expected to begin soon. But hitting the operational target date also depends on the completion of a 275kV high-voltage line that will connect the plant to the grid, state-owned utility PLN said. The 80km transmission line will pass through four districts in south Sumatra. The local government is pushing for the acceleration of the voltage line construction and has instructed the sub-district head and local government offices to provide support for the power line construction, PLN said. Sumsel 1, once fully operational, will operate on a build-own-operate basis with a 25-year power supply contract with PLN, the utility said. By Antonio delos Reyes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Business intelligence reports
Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.
Learn more