Indonesia recorded a 5% m-o-m increase in its thermal coal exports in May’21 to 29 million tonnes (mn t) as against 27.6 mn t in Apr’21, CoalMint’s vessel line-up data reveals.
While exports from south Kalimantan recorded a sharp increase of 19.8% m-o-m at 10.2 mn t, the same from east Kalimantan rose by 2.6% to 16.4 mn t. However, coal exports from Sumatra and north Sumatra fell 30.7% and 30.4% to 1.4 mn t and 0.28 mn t, respectively.
Strong China demand pulls up exports from Kalimantan
Despite heavy rains in Kalimantan provinces which disrupted production and coal transportation, the exports from the region rose sharply in May due to strong buying interest from China over the last few months.
However, tightening coal supply in Indonesia and low cargo availability capped any further rise in exports.
“Cargo availability is likely to remain under pressure this year, at least, as, from September onwards, China will start stocking coal for the winter months,” an Indonesia-based trader said.
A sharp decline in China’s coal production this year, following a few fatal accidents at its mines, had forced local traders to look for cheaper coal overseas after domestic prices reached all-time highs.
The Indonesian coal index rallied over the last three months. Prices of the popular grade 5,000 GAR were last assessed at $83.8/t, while the 6,500 GAR wasat $103.99/t, FoB.
Though the Chinese Cabinet stepped in to cool off soaring domestic coal prices and recently lifted restrictions on coal imports for a few Chinese provinces until the end of June, the country’s dire need for the fuel amidst its ban on Australian coal kept Indonesian coal prices higher.
Exports to China, South Korea rise
CoalMint’s vessel line-up data reveals, Indonesia’s coal exports to China rose by 59% m-o-m to 12.1 mn t last month, while those to South Korea were also up, by 58% to 1.11 mn t.
However, weak demand for coal in India amidst Covid-related restrictions and surging Indonesian prices weighed on exports to the country as these fell by 32% m-o-m to 6.99 mn t last month, CoalMint’s data showed.
Due to Vietnam’s increased interest in Australian coal, Indonesian coal exports to this country also fell by 21% m-o-m to 1.13 mn t, data showed.
The Indonesian government raised its coal production target to 625 mn t in 2021, up from 550 mn t pegged earlier, to meet China’s strong buying appetite. In 2020, coal production in Indonesia stood at 563 mn t.
So far, production has reached 237 mn t, 38% of the annual production target, the country’s Ministry of Energy and Mineral Resources informed.
Outlook
Amidst China’s altered trade dynamics with Australia, Indonesia’s coal exports are likely to remain higher this year. However, weather related disruptions and lower cargo availability may result in some pause in shipments.
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