Indonesia secures more coal supplies ahead of export ban review (updated)
04/01/2022 09:36
* Coal futures surge in China
* Export ban review set for Wednesday
* State utility secured 7.5 mln T additional supply
* Some firms declare force majeure
(Recast with state utility statement)
By Fransiska Nangoy and Bernadette Christina
JAKARTA, Jan 4 (Reuters) - Indonesia's state utility secured
an extra 7.5 million tonnes of coal supplies on Tuesday, helping
to avert power outages, boost stocks and increase the chances of
the government lifting its export ban soon.
Indonesia, the world's top exporter of the coal used in
power plants and China's largest overseas supplier, on Saturday
announced a ban on exports during January to avoid outages at
domestic generators.
The move has driven up coal prices in China, though
Indonesian authorities are set to reexamine the ban on
Wednesday.
State utility Perusahaan Listrik Negara (PLN) said that
while it had secured the additional supply, it aimed to continue
raise stockpiles to a minimum usage level of 20 days.
"Coal power plants that have been in crisis are starting to
see their supply issue being resolved," Darmawan Prasodjo, PLN
chief executive said in a statement.
A PLN spokesperson could not immediately comment on how much
more supply PLN needed for the intended stock level. PLN had
previously said it needed 5.1 million tonnes of additional
supply for January to avoid widespread outages.
Pandu Sjahrir, chairman of the Indonesian Coal Miners
Association (ICMA), said the group's ten biggest members would
help PLN close the supply gap as a "very short-term solution."
A full month ban could be averted by such coordination, said
Rory Simington, principal analyst for Asia Pacific coal research
at Wood Mackenzie.
"A halt in Indonesia's exports would have a major impact on
thermal coal markets but a total ban for January is unnecessary
and unlikely to be implemented in our view," Simington said.
"We are expecting 40 million tonnes of Indonesian exports in
January and total domestic demand is in the region of 12 million
tonnes; addressing any shortfall would require only a fraction
of total capacity," he added.
ICMA said in a statement on Tuesday that the group was in
discussion with the government to resolve the problem and
working with members to fulfil domestic obligations.
"We are optimistic that the supply shortage in some power
plants can be resolved soon and we hope that exports can be
gradually reopened," it said.
The group said distribution was affected by difficulties in
securing vessels to transport coal to the state utility.
"The main obstacle in the field that hinders the
acceleration of supply distribution is barges availability," it
said.
CHINA PRICES RALLY
Coal futures in China, the world's biggest consumer of the
fuel, surged on Tuesday in a sign of concerns the export ban
could threaten energy security in some of the world's biggest
economies. urn:newsml:reuters.com:*:nL1N2TK02S
China's benchmark thermal coal futures rose by as much as
7.8% in the first day of trading since the policy was announced.
The futures closed at 713.80 yuan ($112) a tonne, up 6.4%.
urn:newsml:reuters.com:*:nL1N2TK02S
It was the biggest daily increase since Oct. 19, when prices
climbed to a record 1,848 yuan a tonne amid a supply deficit in
China caused by shortages from domestic mines.
If sustained beyond the Wednesday review, Indonesia's ban
could pressure China to rethink unofficial import restrictions
it has placed on Australian coal.
"If Indonesia's coal export ban were to be extended, China
would need to resort to Australian coal once again, with the
latter being a major beneficiary of Indonesia’s coal export
ban," said Sabrin Chowdhury, an analyst at Fitch Solutions, part
of Fitch Group.
Some smaller miners in Indonesia have declared force majeure
on their shipments, the legal term for when a supplier cannot
meet a contract because of forces beyond their control, coal
traders based in Singapore and India said on Tuesday.
The firms that declared the force majeure were mostly those
that had not fulfilled the so-called domestic market obligation
(DMO), a coal mining executive in Jakarta said.
Under the rule, miners are required to sell 25% of their
output to local power plants at a maximum price of $70 per
tonne.
Indonesian President Joko Widodo threatened on Monday to
revoke the business permits of miners that failed to meet their
DMO requirements.
Asia's economic powerhouses China, India, Japan, and South
Korea, together received 73% of Indonesian coal exports in 2021,
ship tracking data from Kpler showed.
($1 = 6.3731 Chinese yuan renminbi)
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Indonesia coal exports to top destinations https://tmsnrt.rs/3ERDQay
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Fransiska Nangoy and Bernadette Chrisitina Munthe
in Jakarta; Additional reporting by Sudarshan Varadhan, Beijing
bureau; Editing by Christian Schmollinger and Mark Potter)
((Fransiska.Nangoy@thomsonreuters.com;))