March 7, 2019 - Indonesian thermal coal producers said Thursday they see minimal impact on coal prices amid a shutdown of coal gasifiers in west India.
Around 550 ceramics manufacturers, which currently use coal to run their units, are possibly impacted by the National Green Tribunal (NGT) order, according to a member of the Morbi Ceramics Association based in Morbi in the western Indian state of Gujarat.
The NGT has asked the ceramic units to stop using coal gasifiers and switch over to LNG/PNG to curb rising air pollution.
The units are using 4,200 kcal/kg GAR and 5,000 kcal/kg GAR grades of coal, with daily consumption for the industry of about 10,000 mt, according to market sources.
Market sources in India and Indonesia reacted calmly to the shutdown and questioned the feasibility of moving away from coal as the primary fuel in the industrial units.
An Indonesia-based producer said the orders to close industrial units have been there for the past seven years.
However, a Singapore-based trader said some seaborne traders are in a state of chaos upon hearing the news.
"Bid prices for Indonesian thermal coal will lose steam, "especially the mid-calorific value coal with high sulfur content," he said.
He said Indonesia prices might not receive an immediate effect from this closing order.
However, there is not sufficient PNG/LNG supply to fulfill the current demand, the Morbi Association member said.
He said the order will be difficult to implement.
Efforts and measures have been put in place for Morbi to shift its primary fuel from coal to gas, but there has not been a significant effect, according to the producer.
An Indonesia-based trader said that it will not be easy to change the fuel from coal to gas.
A market source said coal is still a cheaper alternative for India buyers.
Climate change measures are rolled out under international agreements or obligations, but it will be difficult to implement such steps, according to the source.
An India-based source said it will be costly to stop coal gasification, and added that competition with Chinese end-user industries will get tougher.
Several people will be rendered jobless and manufacturers will face a huge loss as coal is a cheaper fuel, he said, adding that the association is yet to see the order.
"We will file an appeal in the Supreme Court of India against the NGT order," he said.