JAKARTA (TheInsiderStories) - China announced to lift its import quota for thermal coal by 20 million tones (MT) of coal until the end of the year. Last year, the world second largest economy import 300 MT of both coking and thermal coal from various countries.
Some analysts rated, Indonesia and Russia are likely to get benefits from the increased quota. The countries are the three biggest suppliers of seaborne thermal coal to China, while Australia and Mongolia dominate exports of coking coal, which is used in steel furnaces.
The coordinating ministry for the economic affairs has reported, as of October of 2020, the realization of thermal coal exports only 232.3 MT or 58.88 percent of this year’ targets 395 MT of coal. The sluggishness also seen from the realization of investment. From the initial target of $7.7 billion, only 27.16 percent or $2.1 billion has been realized.
To support the coal export, recently, Indonesian Coal Mining Association and China Coal Transportation has signed a deal worth US$1.47 billion to buy 200 MT of thermal coal starting next year. The analysts from Kiwoom Sekuritas, Sukarno Alatas, assessed this purchase would have a positive impact for coal mining issuers.
While, head of research at NH Korindo Sekuritas Indonesia, Anggaraksa Arismunandar, rated that the news give a breath of fresh air for the local miners. Based on his data, issuers that have a portion of sales to China are PT Adaro Energy Tbk (IDX: ADRO), PT Indo Tambangraya Megah Tbk (IDX: ITMG), and PT Harum Energy Tbk (IDX: HRUM).
Earlier, the minister of energy and mineral resources (MEMR), Arifin Tasrfin, said that the demand for coal in the Indonesian market fell 20 percent due to the policies of major coal importer countries such as India and China, which prioritize domestic coal production. The minister emphasized that the COVID-19 outbreak has also resulted in a decline of coal price, global demand, limited access and mobility.
As the impact, he said, the realization of national coal production also fell to 362 MT of coal from a year ago reached 409 MT of coal. MEMR data notes that the realization of coal production in the January – August of 2020 period is equivalent to 66 percent of the national coal production target at 550 MT of coal.
Even so, said Tasrifin, his office not changed the outlook for the national coal production until the end of this year. The ministry has set the reference of coal price for direct sales for delivery of Free on Board sales for September at $49.42 a MT of coal.
The benchmark price slightly decreased by 1.83 percent compared to the August worth of $50.34 per MT of coal. When compared with the the same month in 2019, the price amounting to $65.79 a MT of coal and experienced a significant decreased of 24.88 percent.
To help the coal producers, Tasrifin has urged the coal producer to prioritize the fulfillment of domestic primary energy needs to support the government’ renewable program. He also decided to continue the domestic market obligation at least 25 percent of the total coal production in 2020. These provisions are contained in Ministerial Decree Number 261 of 2019 concerning Fulfillment of Domestic Coal Needs for 2020.
According to Refinitiv data, China’ coal imports from Indonesia decreased 24.5 percent in the first 10 months of 2020 to 86.88 MT of coal from 115.03 MT of coal in the same period last year.
Written by Editorial Staff, Email: theinsiderstories@gmail.com
