Background
TRADE comes from TRANSFER (right and payment) and DELIVERY (goods), so basically if we talking about trade that means we talking about how to transfer (right and payment) and how to delivery (the goods).
Coal trade means how to transfer and delivery the coal from the mining site to buyer site and than to make all parties safe, we go to the agreement and paper work.
There are 2 types of coal trading:
1 . International Coal Trade
2 . Domestic/Local Coal Trade
International Coal Trade was an open market, every body/company can play in this market, now we can see the player here from “no-name company” until the big company such as Morgan Stanley/JP. Morgan. The different just about sources (big trader go to the big miner) and volume. As an open market every body welcome to play as long as ready with the real sources and the real buyer.
Domestic Coal Market is very attractive market, good price, easy handling, no language dispute, fast and simply. Vary type needed from low to hi-calorie, usually in Lump Size, they call it “lampi” means un-crushed, not too worry about moisture but they will stare for your AFT. For sources, cilegon using Sumatra coal before (come by truck), only Indonesian Power use Kalimantan coal but now South Kalimantan still possible to come down here. The destination for domestic market spread along Java North Coast in 5 points, Cilegon, Tg. Priuk/Marunda, Cirebon, Semarang and Gresik.
The Coal
3 from 5 Big Island in Indonesia territory has huge deposit/reserve of coal, they spread in many types and many character, there are Sumatera, Kalimantan and Sulawesi. Mostly buyers from overseas was knows about Sumatera and Kalimantan, from Sumatera The Biggest producer was PT. Bukit Asam (owned by government) and from Kalimantan we can see PT. Kalimantan Prima Coal (KPC), Adaro, Kodeco, Arutmin, etc. They export from Indonesia many types, from low calorie until Anthracite.
We can divide Coal base on geological formation as follow (in Air Dried Basis);
1. Anthracite, calorie 8000 up
2. Bituminus, calorie 6000 - 8000
3. Sub Bituminus, calorie 5000 - 6000
4. Lignit, calorie 5000 down
Base on utilization can divide as;
1. Met Coke/Anthracite, calorie 8000 up
2. Coking Coal/Coke, calorie 7000 - 8000
3. Thermal Coal/Steam Coal, calorie 5000 – 7000
a. Hi- Calorie, 6000 – 7000
b. Middle Calorie, 5600 – 6000
c. Low Calorie, 5100 – 5500
d. Non-Spec
Standard Parameter for Premium Steam Coal (key point to price adjustment)
Coal Type
|
Calorie
|
TM/Moisture
|
Ash
|
Sulfur
|
Hi-Calorie
|
6000-8000
|
10 – 18%
|
10 – 12%
|
1%
|
Middle Calorie
|
5600-6000
|
25 – 34%
|
10 – 12%
|
< 1%
|
Low Calorie
|
5100-5500
|
35 – 39%
|
6 – 10%
|
< 1%
|
The Prospect
For International, the market influenced by International Index, they price will up and down depend on International issue, politics and movement of the Market Leader. Now the big buyer is China and the most influence index is Newcastle Index (Australia), they both can control and play as the market leader.
In trading, International Trade will make around US$ 5 (minimum) in single shot (shipment) for minimum 30.000 MT and 1 month turn over.
For Domestic, attractive but need more control, most of the local buyer want to “Franco buyer site” method, that’s mean we have to assist and guard the coal from the mining site to the buyer site. The margin more attractive than export, we can make US$ 5 – 10 in single shot but just for 8.000 MT and 1 month turn over.
As long as we have the real buyer and not just 1 buyer, we can make the margin double or triple base on our equity and buyer capability, for both International and Domestic Market.
The Sources
As the player in this market for the last 5 years, we have many reliable sources, not just from Kalimantan (South and East) we have connection to few mine in South Sumatra and Bengkulu also. The classic problem in this trade is the miners always ask for cash and the buyer always want to pay with LC or SKBDN. So as a trader, if we can bridge the gap, we just look for the matching price to make a deal.
Ardi Ch Tamin (2008 - 2013)