BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
COOKIE NOTICE

Register with us today

and in less than 60 seconds continue your access to:Latest news headlinesAnalytical topics and featuresCommodities videos, podcast & blogsSample market prices & dataSpecial reportsSubscriber notes & daily commodity email alerts

Already have an account?

Log in to register

Forgot Password

Please Note: Platts Market Center subscribers can only reset passwords via the Platts Market Center

Enter your Email ID below and we will send you an email with your password.


  • Email Address* Please enter email address.

If you are a premium subscriber, we are unable to send you your password for security reasons. Please contact the Client Services team.

If you are a Platts Market Center subscriber, to reset your password go to the Platts Market Center to reset your password.

In this list
Coal

Analysis: Large Indonesian coal miners to maintain output despite sagging demand

LNG

European LNG chronicles: The Russia question

Coal

Platts Global Coal Alert

Renewables | Natural Gas | Fuel Oil | Utilities

Central American Energy Conference, 22nd Annual

Coal

Thailand's Feb coal imports slide 12% on year to 1.69 mil mt

Analysis: Large Indonesian coal miners to maintain output despite sagging demand

Highlights

Several large Indonesian thermal coal miners continue to forecast stable to higher production targets for 2016 despite weakening demand in both India and China, putting downward pressure on prices.

Not registered?

Receive daily email alerts, subscriber notes & personalize your experience.

Register Now

Indonesian coal suppliers have been hit by a significant drop in Chinese imports of thermal coal and increasing domestic output in India.

"China import demand for the thermal coal is expected to continue to decline over the medium term," said Tim Buckley, director of Energy Finance Studies at the US-based Institute for Energy Economics and Financial Analysis. Coal production in China fell about 6.8% in the first four months of 2016 from the same period last year, while thermal power generation was down 3.2% over the same period.

"All are very negative trends in terms of falling demand from China, and a likely increase in China looking at export opportunities," Buckley said.

Article Continues below...

China, which produces about 4 billion mt/year of coal, lowered its export tax to 3% from 10% early last year, fueling speculation the country might look to become a net exporter in the near to medium term.

Global seaborne thermal coal demand is seen declining 25% by 2020 from 2014 peak volumes, Buckley noted.

Goldman Sachs analysts expect seaborne trade to contract by 10% over 2015-2020.

Indian imports fell about 19% year on year in the first four months of 2016. For fiscal year 2015-2016, Indian imports, including metallurgical and thermal coal, were down 15% to 182 million mt.

"IEEFA expects Indian import demand for thermal coal to continue to decline at 10-20% year on year rates over the coming year, considering the comments from NTPC Ltd, the biggest user of coal in India, saying they will not import any thermal coal in next 12 months," Buckley noted.

Growing domestic production in India has led NTPC to significantly cut imports. India has set a target of doubling coal production to nearly 1 billion mt by 2019.

"India sits on substantial coal reserves equivalent to 150 years of current consumption, so a scarcity of resources has never been a constraint on future production," Goldman Sachs analysts said.

With dwindling demand in both China and India, several Indonesian suppliers have begun to shift their focus to emerging economies like Vietnam, Thailand, the Philippines, Malaysia and other Southeast Asian countries.

"For all the talk that Southeast Asia will grow strongly in terms of thermal imports, this is at best growth sufficient only to offset the ongoing decline in European imports," Buckley said.

AVERAGE SELLING PRICES DOWN SHARPLY IN Q1

Several Indonesian miners have reported a significant slump in the first quarter average selling price and sales volume from a year earlier amid persistent oversupply, but falling production costs due to low oil prices have provided a cushion.

Indonesian miner PT Indo Tambangraya Megah on Monday said its Q1 average selling price slumped 21% year on year to $47.60/mt, while coal sales fell 0.2 million mt, or 3%, to 6.9 million mt.

The company, which supplies about 35% of its output to China and India, is still targeting production of 26.9 million mt in 2016, compared with 28.5 million mt in 2015.

Another major Indonesian miner, Adaro Energy, said its Q1 average selling price slumped 17% year on year even though its sales volume remained flat at 13.5 million mt.

"The first quarter was characterized by persistent oversupply in the thermal coal market," the company said. "Despite some planned cuts and closures, supply remained abundant."

However, its coal cash cost, excluding royalties paid to the Indonesian government, fell 26% to $20.94/mt in Q1, partly due to lower fuel costs and lower stripping ratios -- the amount of overburden removed to extract coal, Adaro said.

The company is targeting production of 52 million-54 million mt for 2016, in line with the year before.

PT Harum Energy said its average selling price in Q1 was $48.30/mt, down 12% year on year, while its sales volume slumped 33.8% to 0.9 million mt.

Harum said its FOB vessel cash cost fell 20.3% to $32.20/mt in Q1 from $40.50/mt a year earlier.

PT Indika Energy, which has a stake in major Indonesian miner Kideco Jaya Agung, said in its Q1 report that Kideco's average selling price slumped 19% year on year to $37.90/mt, while its sales volume fell 8.8% to 9.5 million mt. Its cash cost, including government royalties, fell to $34.90/mt in Q1 from $37.10/mt a year earlier due mainly to lower stripping ratios.

--Deepak Kannan, deepak.kannan@spglobal.com
--Edited by Wendy Wells, wendy.wells@spglobal.com