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Indonesia’s state service secured an additional 7.5 million tonnes of coal supplies on Tuesday, helping to prevent power outages, increase stocks and increase the chances of the government soon lifting its export ban.
The island country, the world’s largest exporter of coal used in power plants and China’s largest foreign supplier, announced a ban on exports in January on Saturday to avoid disruptions to domestic generators.
The move has raised coal prices in China, although Indonesian authorities will re-examine the ban on Wednesday.
The Perusahaan Listrik Negara (PLN) public service said that although it ensured additional supply, the warehouse was intended to continue to rise to the minimum 20-day usage level.
“The coal-fired power plants that have been in crisis have begun to see that they are solving the supply problem,” PLN CEO Darmawan Prasodjo said in a statement.
A PLN spokesman was unable to immediately comment on how much more supply is needed for the stock level planned by the PLN. The PLN said it needed an additional 5.1 million tonnes of supplies by January to avoid major disruptions.
Pandu Sjahrir, president of the Indonesian Coal Miners Association (ICMA), said the top 10 members of the group would help close the supply gap to the PLN, “as a very short-term solution.”
“Complete ban”
With that coordination, a month-long ban could be avoided, said Rory Simington, chief coal research analyst at Pacific Asia in Wood Mackenzie.
“Stopping Indonesian exports would have a major impact on thermal coal markets, but a complete ban by January is not necessary and we believe it is unlikely to be implemented,” Simington said.
“We expect 40 million tonnes of Indonesian exports in January and total domestic demand is 12 million tonnes; it would only take a fraction of the total capacity to fix any shortcomings, ”he added.
ICMA said in a statement on Tuesday that the group was in discussions with the government to resolve the issue and work with members to carry out domestic duties.
“We are hopeful that the supply shortage of some power plants will soon be remedied and we look forward to reopening exports gradually,” he said.
The group said the distribution was caused by difficulties in securing coal transport vessels to the state service.
“The main barrier in the area that hinders the acceleration of supply distribution is the availability of barges,” he said.
The future of coal in China the world’s largest fuel consumer, a rise in exports on Tuesday is a sign of concern that energy security may threaten the world’s largest economies.
China’s benchmark thermal coal futures rose 7.8 percent since the policy was announced on the first day of trading. Futures closed at a price of 713.80 yuan ($ 112) per tonne, up 6.4 percent.
It was the most significant day-to-day increase since Oct. 19, when prices rose to a record high of 1,848 yuan ($ 291) a tonne, amid a shortage of domestic mines in the midst of China’s supply deficit.
If it stays beyond Wednesday’s review, Indonesia’s ban could put pressure on China to reconsider its unofficial import restrictions on Australian coal.
“If Indonesia’s coal export ban were to be extended, China would have to turn to Australian coal again, the latter being the main beneficiary of the Indonesian coal export ban,” said Fitch Group Fitch Solutions analyst Sabrin Chowdhury. .
Some small Indonesian miners have declared an unavoidable case in their shipments when a supplier is unable to fulfill a contract due to forces beyond their control, coal traders based in Singapore and India said on Tuesday.
The companies that declared the case were mainly those that did not comply with the so-called internal market obligation (DMO), according to a coal mining official in Jakarta.
As a rule, miners must sell up to 25 percent of their production to local power plants for up to $ 70 a tonne.
Indonesian President Widodo on Monday threatened to revoke the business permits of miners who did not meet DMO requirements.
Asia’s economic powers, China, India, Japan and South Korea, together accounted for 73 percent of Indonesia’s coal exports in 2021, according to Kpler’s vessel tracking data.
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