Indonesian miners shipped 104.78 MnT of coal in the first three months of 2018, rising 12.96% from 92.76 MnT in the same period in 2017, data from Bank Indonesia, the country’s central bank showed.
Overseas shipments in March this year also climbed 8.43 % to 38.025 MnT, from 35.067 MnT in March last year, data showed.
The central bank didn’t give any reason for the increase in exports.
Hendra Sinadia, executive director at the Indonesian Coal Mining Association, said the favorable weather may contribute to rising shipments in the first quarter of this year.
PT Indo Tambangraya Megah, one of Indonesia’s top five coal producers, noted in a note to investors that demand for the first quarter of this year was strong due to rising imports from India and China. Winter demand and tight domestic supply boosted China’s imports in 1Q18, while the persistent shortfall in domestic supply and strong demand due to improving domestic economy increased India’s appetite for overseas coal.
Although China is seeking to reduce thermal coal imports this year to meet 2020 goals, based on year-to-date import rates, a year-on-year reduction will be difficult while trying to keep prices within a healthy range at the same time, the company said in a note posted on its website. While demand growth from other developing economies will offset China declines, it added.
On the supply side, the company expects a new regulation which cap coal prices for domestic utilities at USD 70/MT will encourage producers to export. On the other hand, in Australia, bad weather and maintenance, limited supply growth in the first quarter of this year.
The company expects sufficient near-term supply to meet 2018 demand.
“Suppliers in all exporting countries are expecting to see their exports rise this year, but some are going to be disappointed.”
Indonesia and Australia may face competition in Asia market from Colombia and Russian coal. Weak European demand will force Colombian producers to seek alternative buyers, ITMG said in its presentation. Colombian coal is competitive for delivery to Asia.
Russian coal is also still competitive for shipments to Asia.
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