China to remain swing buyer: Platts

By Adianto P. Simamora

Despite the projected declining coal demand from China, the giant country would still impact Newcastle price in the short term outlook, according to Platts.

?China will remain the swing buyer that can meaningfully impact Newcastle prices when considering the short term price outlook,? Surya Kanegaonkar, Coal Analyst of Platts.

Indonesia and Australia will compete to enter China?s declining coal market in coming years.

?We expect Australian thermal supply to not drop significantly over the course of 2016 and much of 2017 despite the 28.5% decline in Chinese imports from the country in 2015,? he said.

?Supply side rationalization in the Asian exports market is happening to a greater degree in the lower calorific value band, and hence more in Indonesia relative to Australia.?

According to Platt, Australian mining costs stand at between $35-$40/mt for 6,000 kcal/kg, and with take-or-pay agreements standing at approximately $10/mt, it yields an FOB price of between $45-$50/mt.

While Indonesia?s nearly 150 million tons are produced in the 4,800-5,200 kcal/kg GAR range have an average cost of $25-27/mt.

Editing by Reiner Simanjuntak