JAKARTA (TheInsiderStories) - The Indonesian Coal Mining Association said China would buy thermal coal from Indonesia amounting to US$1.47 billion from starting next year. The trade deal has been signed by the organization and China Coal Transportation on Wednesday (11/25).
“It is expected that there will be an increase in coal exports to China by 200 million tones in the coming year, the target amount will be reviewed annually,” wrote the association in an official statement released today.
As the world’ largest thermal coal exporter, Indonesia has used diplomatic channels to promote coal sales throughout Southeast Asia, especially in Vietnam, as exports to China have slowed.
According to Refinitiv data, coal imports fom China, the world’ largest thermal coal consumer, to Indonesia has decreased 24.5 percent in the first 10 months of 2020 to 86.88 million tones (MT) of coal from a year ago to 115.03 MT of coal. The coordinating ministry for the economic affairs data showed, as of October, the realization of national coal exports only slightly exceeded 50 percent of this year’ targets, 395 MT of coal.
Until October, total export of thermal coal only 232.3 MT of coal or 58.88 percent of this year’ target. The sluggishness of the national coal industry 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.
The minister of energy and mineral resources (MEMR), Arifin Tasrfin, said that the demand for coal in the Indonesian market fell 20 percent and South Korea dropped by 15 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.
Currently, 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 level 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.
The commodity trader Noble Resources, Global demand for imported thermal coal may rise to 960 MT in 2021, up from an expected 925 MT of coal in 2020, said Rodrigo Echeverri, head of research at Noble. Its projected, the demand for this year will lowering from 1.04 BT of coal seen in 2019 as the pandemic curtailed the consumption globally.
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Written by Editorial Staff, Email: theinsiderstories@gmail.com
