Several Indonesian coal producers are shifting towards domestic markets for sales of coal amid rising consumption. Coal supply in the domestic market is yielding more profits than the traditionally strong export markets.
Officials from Indonesian are planning to lower coal production in coming years, with the declining coal exports. However, domestic consumption is expected to increase with more coal-fired plants likely to be added.
The country is planning a total coal production of 413 MnT in 2017, down from 419 MnT in 2016.
While exports are expected to fall from 306 MnT in 2016 to 292 MnT this year, domestic consumption is expected to rise to 121 MnT from 111 MnT in 2016.
Reason for the shift towards Domestic market:
Indonesian thermal coal suppliers are seeking alternative markets amid uncertainties surrounding coal demand from major buyers like China and India.
China’s domestic coal policy was the main reason for the instability in global coal prices. The country had imposed production restriction on local mines last year which resulted in supply tightness and a significant surge in coal prices.
Later this year, China lifts up the restriction on coal production, easing supply and pulling prices down.
Moreover, India is also backing up domestic coal from CIL to cut its dependence on imports.
While Indonesia’s total coal production in 2016 was relatively flat Y-o-Y, its exports fell 2% and supply to the domestic market jumped 11% Y-o-Y.
Indonesian Coal Prices:
Indonesian coal prices continued its downtrend this week on slack demand. Indonesian Coal Index(ICI 1, 6500 GAR) has fallen 4% W-o-W to USD 77.84/MT this week compared with USD 80.82/MT in the previous week.
Coal prices of 5000 GAR decline to USD 55-56/MT, FoB Kalimantan. 4200 GAR was assessed at USD 36/MT, FoB Kalimantan while Low CV 3800 GAR was assessed at USD 30-31/MT, FoB Kalimantan.
In India, Offers for 4200 GAR were heard at USD 42-43/MT, CFR India and that for 3800 GAR coal at 38-39/MT, CFR India.
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