Indonesia has warned that its coal supply situation remains critical ahead of a review today 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 yesterday 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 at the generators run by state-owned utility Perusahan Listrik Negara (PLN).
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.
Photo: Reuters
China’s benchmark thermal coal futures rose by as much as 7.8 percent on the first day of trading since the policy was announced and were at 712.40 yuan (US$111.81) a tonne. That is the highest since Dec. 20 and futures are set for their biggest gain since Oct. 19.
Late on Monday, PLN said it has secured 3.2 million tonnes of coal out of the 5.1 million tonnes of additional supply for January that it needs to avoid widespread outages.
However, it warned that “this critical period is not yet over,” adding that it continued to coordinate with the Indonesian government and other coal suppliers.
At the same time, Indonesian President Joko Widodo said that coal miners, as well as liquefied natural gas producers, must prioritize domestic supply and ensure energy security in Indonesia before exporting.
He threatened to revoke the business permits of miners who failed to meet a so-called domestic market obligation that requires them to sell 25 percent of their coal output to the domestic market at a maximum price of US$70 per tonne.
Indonesian Minister of Finance Sri Mulyani Indrawati said that the ban was enacted to avoid disrupting the recovery of Indonesia’s economy, Southeast Asia’s biggest, from the COVID-19 pandemic.
However, the decision endangers Asia’s economic powerhouses China, India, Japan and South Korea, which together received 73 percent of Indonesian coal exports last year, shiptracking data from Kpler showed.
Indonesian authorities are set to re-examine the export ban today.
The logistics of rerouting coal cargoes to PLN’s power stations will be challenging, because it will require smaller barges rather than large carriers, a Singapore-based coal analyst said.
Indonesian Coal Miners’ Association chairman Pandu Sjahrirof said that as a “very short-term solution” the group’s 10 biggest members would help PLN close the supply gap.
Indonesian State-Owned Enterprises (SOE) Minister Erick Thohir said in a statement that his ministry is working to improve PLN’s coal supply management and infrastructure.
“We at the SOE Ministry will improve the long-term supply contracts,” Erick said, adding that the logistics system and infrastructure would also be upgraded to ensure domestic coal needs are met.
Analysts on Monday warned that India, which consumed more than 15 percent of Indonesia’s coal exports last year, might reroute shipments from other suppliers if the ban persists.
That could mean higher demand for coal from Australia, also a major supplier to Asia.
Shares of Whitehaven Coal jumped as much as 9.2 percent yesterday, the most since July 16.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai
RSS