Indonesia recorded a 20% m-o-m increase in its thermal coal exports in Jul’21 to 30 million tonnes (mn t) as against 25 mn t seen in Jun’21, CoalMint’s vessel line-up data revealed.
The exports uptick was on account of increased Asian demand.
Exports from east Kalimantan rose by 25% to 16.8 mn t, and those from South Kalimantan were up by 19% m-o-m to 10.7 mn t.
Coal exports from Sumatra rose marginally by 1% m-o-m to 2 mn t, while those from north Sumatra fell marginally to 0.07 mn t.
Declining inventory at Chinese utilities lifts exports
Last month, China faced an unprecedented crisis of depleting coal stockpile at major power plants in the country as traders then had taken a backseat and awaited a coal price correction before making any major bookings.
Consequently, soaring summer temperature raised air conditioning demand and manufacturing units had to cut down electricity usage. Traders, that time, rushed in to procure Indonesian coal at higher prices.
The coal supply shortage in the country, thereafter, worsened further with heavy floods in central China which disrupted the supply chain in the major coal-producing province of Henan.
Coal exports from Indonesia rose sharply as miners diverted cargoes to China, which lifted prices of the fuel sharply.
A slowdown in coal production last month in Indonesia due to its rising Covid-19 cases also played a major role in surging prices as Indonesia’s benchmark HBA coal price rose to its decade high of $131/tonne (t) for Aug’21, up 14% m-o-m.
Exports to major destinations rise
Indonesia’s thermal coal exports to India rose by 82% m-o-m to 5.59 mn t in Jul’21 as manufacturing activities in the country gained momentum. Majority of Indonesian vessels coming to India were booked by end-users and a few large scale importers.
An unusual hot weather in South Korea last month amidst unplanned nuclear outages also led to a sharp rise in its coal imports. Indonesia’s coal exports to South Korea were recorded at 2.03 mn t, up 52% m-o-m.
Exports to Vietnam also rose by 19% m-o-m to 1.06 mn t, CoalMint vessel line-up data showed.
Supply shortfall in Indonesia
Amidst a surge in Indonesian coal exports since the beginning of the year, the country currently has been facing a domestic supply shortfall with rapidly depleting stockpile at power utility, Perusahaan Listrik Negara (PLN).
The Indonesian Ministry of Energy and Mineral Resources (ESDM) has so far directed miners to abide by the DMO wherein miners are required to sell 25% of their total planned output domestically. It has also imposed sanctions on coal exports of 32 companies after they failed to fulfill their DMOs.
According to market participants, the ban on coal exports from these companies is likely to amount to a loss of 50-60 mn t of supply.
Outlook
Coal exports from Indonesia are likely to remain under pressure in Aug’21 as the domestic supply conditions remain grim alongside the rising Covid-19 cases in the country.
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