Chinese thermal coal futures fell yesterday after Indonesia, the world’s biggest thermal coal exporter, eased a ban on overseas shipments that surprised buyers at the start of the year, alleviating concerns about supply disruptions.
The export ban was introduced after state power utility PT Perusahaan Listrik Negara (PLN) reported critically low coal stockpiles amid complaints miners were not fulfilling their responsibilities to supply fuel to the company.
Driven by concerns about the impact to their economies which depend on coal-fired power generation, the governments of Japan, South Korea and the Philippines called for the measure to be eased.
Indonesia late on Monday agreed for 14 coal vessels to depart as soon as they got permits from authorities.
To ensure PLN does not run low on coal again, the government is discussing new procurement policies, including a levy system for miners.
The ban, which came into force on Jan. 1, triggered a rally in Australian and Chinese coal prices last week, but Chinese thermal coal futures yesterday fell more than 3 percent to 685 yuan (US$107.50) in reaction to the relaxation.
“There is still demand for Indonesian coal from Chinese power plants,” one China-based trader said, adding that some might turn to Russian coal as an alternative.
Shares of top Indonesian coal miners PT Bumi Resources Tbk, PT Adaro Energy Tbk and PT Indika Energy Tbk rose in early trading yesterday before paring gains.
The Indonesian Ministry of Transportation had not allowed any export-bound ship with coal to leave ports as of yesterday morning as it awaited a directive from the energy ministry, Sea Transportation Director Mugen Suprihatin Sartoto said.
There were about 120 vessels either loading or waiting to load off Indonesian’s coal ports in Kalimantan on the island of Borneo, Refinitiv data showed.
The Indonesian government is to conduct a review today and if it fully scraps the ban, it would do so gradually as it considers how the resumption affects compliance with so-called Domestic Market Obligation rules, Coordinating Minister of Maritime and Investment Affairs Luhut Pandjaitan said on Monday.
Under the rules, miners are required to sell 25 percent of output to the local market at a maximum price of US$70 per tonne for domestic power plants.
The Indonesian government is mulling a formula that would make miners pay a levy to a government agency, which would use the revenue to help PLN pay for its coal needs at market prices, Luhut said.
Under one possible scenario, miners would pay a levy based on output that would be evaluated periodically depending on the gap between market prices and the US$70 per tonne threshold, an official document said.
The document puts the potential levy at US$3.87 a tonne, which could provide an estimated US$2.5 billion a year to help PLN procure coal.
The government also plans to dissolve PLN’s coal procurement unit, PLN Batubara, so PLN can deal directly with miners and not go through traders, Luhut said.
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