Register now for FREE unlimited access to Reuters.com
JAKARTA, Jan 4 (Reuters) – Indonesia has warned that its coal supply situation remains critical, ahead of Wednesday’s review of its export ban, unnerving global markets for the fuel used to generate most of the electricity that drives Asia’s biggest economies.
Coal futures in China, the world’s biggest consumer of the fuel, surged on Tuesday after Indonesia, the top exporter of the coal used in power plants and China’s largest overseas supplier, on Saturday banned exports for January to avoid outages atits domestic generators.
The price rise is among the first signs of the impact of Indonesia’s coal export ban, which threatens the energy security of some of the world’s biggest economies such as China, India, Japan and South Korea. read more
China’s benchmark thermal coal futures rose by as much as 7.8% in the first day of trading since the policy was announced and closed at 713.80 yuan ($112) a tonne, up 6.4%. read more
That 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.
Late on Monday, Indonesia’s state-owned electric utility Perusahan Listrik Negara (PLN) said it has secured 3.2 million tonnes of coal out of the 5.1 million tonnes of additional supply for January it needs to avoid widespread outages.
But, it warned that “this critical period is not yet over”, adding that it continued to coordinate with the government and other coal suppliers.
Some smaller miners 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 ones who had not fulfilled the so-called domestic market obligation (DMO), a coal mining executive in Jakarta said.
Under the DMO, 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 who failed to met their DMO requirements.
The export ban endangers Asia’s economic powerhouses China, India, Japan, and South Korea, which together received 73% of Indonesian coal exports in 2021, shiptracking data from Kpler showed.
Indonesian authorities are set to reexamine the export ban on Wednesday.
FULL-MONTH BAN UNLIKELY
Pandu Sjahrir, chairman of the Indonesian Coal Miners Association, said on Monday the group’s ten biggest members will help PLN close the supply gap as…