Stronger Domestic coal prices in China are pulling up Indonesian coal prices.
Indonesian coal market has been suffering from production cut amid bad weather and lower efficiency during the fasting month. As a result, coal prices kept increasing during the month.
Rising Coal prices have also found support from China this week. Domestic thermal coal prices in China are steadily increasing, because of the ongoing safety inspections in large coal producing region of Inner Mongolia and due to warm weather conditions.
Spot price of Chinese 5500 NAR coal was assessed at Yuan 580/MT, FoB Qinhuangdao this week compared with Yuan 570/MT a week ago.
As a consequence, Indonesian Coal Index ICI1 (6500 GAR) coal rose 3.06% W-o-W to USD 81.76/MT this week, on account of increasing Chinese coal prices.
Spot offers for 4200 GAR coal was assessed at USD 42-43/MT, FoB Kalimantan. 3800 GAR coal was offered at USD 36/MT, FoB Kalimantan this week.
New Regulations to Limit Coal Exports:
Indonesian Ministry of Energy and Mineral Resources (ESDM) is drafting a new regulation that will set coal exports limits and subsequently ensure long term coal reserve domestically.
The new regulation will set production quotas for coal producing provinces. Then, those regions will decide the maximum coal production for mining contract holders.
The main aim of the new regulation is to supply sufficient coal to domestic coal-fired power projects and companies that produce coal-associated commodities. The country aims to complete its ambitious 35000 MW power generation program.
The regulation might not be ready and put into effect this year; however after implementation it would affect coal requirements of China and India, which are the major coal importers from Indonesia.
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