Commodity · Uncategorized

Review 2015 and Preview for Indonesian Coal Demand in 2016

Hello readers…!

In the previous post, i tell you that the next article are about the impact of low oil price to Indonesian Economy. I’m really sorry that i can’t continue the article (at least until now) because i’m well occupied in the office. But, to keep my promise to write for this blog at least once in a month, i will change it to other topics. Actually, this is my work results and already reviewed by my supervisor. But the review are in Bahasa Indonesia. You can find it here http://www.bankmandiri.co.id/corporate01/economic.asp?row=11 

Hopefully this writing are useful to all of us…!

  • Indonesia Coal and Lignite Mining sector in 2015 experiencing negative growth in 2015 by dint of global coal price and decreases of Indonesia’s coal production. In 2015, Indonesia coal and lignite mining sector experiencing negative growth -20.9%. This number are deteriorate compare to 2014 which in that year the sector are still growing 0,36% in the middle of declining trend of global coal price. This negative growth is caused by global coal price average is still declining by 16.9% in 2015 compare to 2014 and Indonesia coal production is also declining by 14.4% from 458 million tonnes in 2014 to 392 million tonnes in 2015.

1st

 

  • Indonesia coal export volume in 2015 is decreasing because of declining import volume from primary Indonesia’s coal export destination and Indonesia’s coal are also losing market share in global coal market. Until 2015, Indonesia are still highly relying on export market for every coal produce in the country. The export market proportion are dominating by 81.6% of total coal production in Indonesia.  In 2015, coal export volume are declining by 8.2% compared to 2014. This number are worse compared to 2014 which in that year the growth of coal export are -6.6%. From 4 primary destination of coal export that holds 71.7% share of total coal export from Indonesia (India 34%, China 14%, Japan 10%, and South Korea 10%), only Japan and South Korea are still increase their coal import volume in 2015. (1.8% and 3.2% respectively). While, India and China are decreasing their coal import 0.5% and 31.6% respectively in 2015. Other interesting data that must be watched are coal import volume from Indonesia for all of the primary destination countries experiencing negative growth which indicating that Indonesia’s coal are losing market share in global seaborne coal market.

 

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  • Domestic coal consumption is increasing but is not enough to offset the declining volume in export market. Indonesia coal consumption in January – September 2015 are increasing 9.83% from 61 million tonnes to 67 million tonnes. This increase are originated from the increase of operating Coal-fired powerplant. But, the increase are very small in number and cannot offset the declining volume in export market.
  • In 2016, estimated Indonesia’s coal export volume tends to stagnate because there is still a tendency to declining imports from the country’s main export destinations of Indonesian coal. Indonesian government estimates coal production in 2016 will be in the range of 380-390 million tonnes, almost the same as the actual production in 2015 and lower than the production target set by the government, amounting to 419 million tons. Several factors are predicted to be the cause is the condition of the world coal market is still oversupply, the projected weakening of economic growth in the main export destination, and Indonesian coal are losing competitiveness from coal originated from Australia.
  • Economic growth of Indonesia’s main coal export destination are still uncertain. Slowing trend of economic activity occurred in two countries: China and South Korea. That two countries are projected experiencing slower economic growth in 2016 (6,9% vs 6,3% and 3,0% vs 2,9% respectively). Meanwhile, Japan and India are projected will grow better in 2016. (o.6% vs 1.0% and 7.3% vs 7.5%). Economic growth from main destination of coal export that still not all improved make Indonesia coal demand are still uncertain.
  • Indonesian Coal losing competitiveness to Australian Coal. Composition of coal exporting countries in the world shows that in 2 recent years Indonesia are already not becoming biggest coal exporter in the world. With negative growth 2 years consecutively and Australia still increase their export volume in that periods make Australia becoming biggest of coal exporter now. The supposition of reason why Indonesia coal are losing market share in global market are Indonesian coal have lower calories compared to Australian Coal. With current price, Coal with higher calories relatively will last because they have higher value than coal with lower calories. Another reason are main export destination countries especially China are already selective when importing coal. China will import coal with better quality because of enviromental reason and Australia relatively have better quality of coal compared to Indonesia.
  • Coal price may still be depressed until the third quarter of 2016. This projection is based on the assumption that China’s economic growth slowed in 2016; and the role of the Indian economy has not completely replace China as the largest coal importer. If China’s economic growth is better than the projected figure, then coal prices could rebound more quickly. The average price of coal (year to date) until the middle of February 2016 in the range of USD 50 per tonne.
  • C’rent Spot

    18/2/16

    1Q16 2Q16 3Q16 4Q16 2016  
    OCE 50.9 47.5 45.3 45.3 48.4 46.6
    Bloom

    Berg

    C’rent

    Fwd

    50.4 47.4 44.5 43.3 46.4
    EIU 56.1 59.0 62.0 63.1 60.1

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