Indonesian Coal Miners on Alert of Falling Export Demand

The Indonesian Coal Mining Association (ICMA) estimates that there is a sharp decline in demand in the main destination countries for Indonesian coal exports, due to the impact of the ongoing corona virus (Covid-19) pandemic.

ICMA Executive Director Hendra Sinadia said that the performance of coal mining production in Indonesia in the first quarter period was fairly normal. Hendra said, most of the large-scale companies that are members of ICMA are still producing optimally to meet the targets according to the 2020 work plan and budget.

“For the supply side of production, so far in the first quarter, our exports declined slightly not because of reduced production. But more because of weak demand”, Hendra said.

Hendra explained, as the main export market, demand and supply of coal in China had increased since March 2020. Although the increasing trend of coal consumption in China gave a positive sentiment, this did not automatically make the coal export market in the second quarter flare up.

According to Hendra, the reason was that the abundant coal stockpile reserves in China might make coal imports from the country decline in the following months.

“We are still looking at oversupply problems in China, where their coal stockpile is still quite large. So that it can have an impact on their coal imports in the coming months, especially in late April and in the second quarter”, he explained.

Hendra added, although coal consumption in China is recovering again, total annual imports are predicted to fall sharply in 2020. The same thing happened in the Indian market. In addition, he said, East Asian markets such as South Korea, Japan and Taiwan were also estimated to plummet due to economic pressures, domestic policies, and competition with other energy commodities, especially gas.

At present China and India, as well as East Asian countries are the main export destinations for Indonesian coal. Last year Indonesia’s total coal exports were recorded at 454.5 million tons (MnT). Of that amount, China dominates with 33%, followed by India with 27%. While exports to South Korea were 7%, Japan 6%, and Taiwan as much as 5% of Indonesia’s total coal exports in 2019.