The government of Indonesia reported that the country’s coal export declined by 10% in the period of Jan to May’20 against corresponding period of previous year due to the sluggish demand from China and India which are the key export markets for Indonesian coal in the aftermath of the Corona virus pandemic.
Export realization in the first five months of this year was only 175 mn t worth USD 7.7 billion and the country’s government has targeted to export 441 mn t this year out of the country’s projected production of 550 mn t.
“The value of export in the period of January-May decreased 18% compared to the export realization in the same period last year reaching USD 9.46 billion,” Sudjatmiko, Director of Coal business development at the Ministry of Energy and Mineral Resources said in webinar recently.
He further added that “the weakening export performance was due to the drop of coal demand from importing countries and COVID-19 led decline in coal price as well as the low price of oil in the global market.”
Output cuts to attain balance in demand-supply
Coal shipments from Indonesia had taken the most drastic hit by the coronavirus lockdown in China earlier this year, and are still facing disruptions from partial lockdown restrictions in India.
Accordingly, the Indonesian Coal Mining Association (APBI) has advised its 89 coal-producing members to cut output by 40-50mn t during Jun-Dec’20 to prevent a potential oversupply in the market.
Hendra Sinadia, head of the Indonesian Coal Producers Association, said “The market is currently oversupplied. Production, in particular in Indonesia and Australia, remains strong, but the demand is declining”.
Indonesia’s coal output had fallen by 8.5% to 229.1mn t in Jan-May’20 as against the corresponding period of last year, as per the energy ministry data.
The Indonesian Ministry of Energy and Mineral Resources (ESDM) has reduced this year’s domestic market obligation (DMO) volume for coal producers in response to lower consu mption by the country’s powerhouses.
The revised coal DMO target for this year is set at 140.8 mn t, down by 9.2% from the initial projection of 155 mn t.
As per the Indonesian government’s DMO policy, the country’s domestic coal miners are obliged to allocate/sell one quarter of their annual production to stateowned power producer PT Perusahaan Listrik Negara (PLN) at a government-set price.
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