Indonesian thermal coal exports increased by 10% m-o-m to 35.24 million tonnes (mnt) in March 2024 as against 32.04 mnt in February 2024. However, exports increased by 7% y-o-y to 35.24 mnt in March 2024 as against 32.98 mnt in March 2023. The increase in Indonesian thermal coal exports can be attributed to the easing of supply constraints and improved demand from major importing countries.
Reasons for increase in thermal coal exports
Ease of Supply constraints
Indonesia’s rainy season lasts from November to March each year, bringing an end to the seasonal constraints in Kalimantan and Sumatra, two major coal-producing regions in the country. With the easing of seasonal constraints, exports from East Kalimantan increased by 13% m-o-m to 18.93 mnt in March 2024 compared to 16.80 mnt in February 2023. Meanwhile, exports from South Kalimantan surged by 10% to 11.53 mnt in March 2024. As a result, many spot vessels previously stranded at the ports have been cleared, improving supply conditions at major ports in Indonesia.
Improved demand from importing Countries
Demand from major importing countries have started to move upwards. Indonesian exports of thermal bituminous coal, primarily used in power generation, have seen an increase in demand from major importing countries. Demand from India rose by 15% m-o-m, reaching 10.75 mnt in March 2024, up from 9.37 mnt in February 2024. This rise in demand can be attributed to the full onset of summer, as India relies heavily on thermal energy from coal for its power generation needs. The increase in demand from power plants is linked to the warm weather.
Exports to Vietnam surged by 44% to 1.79 mnt. Vietnam, which hosts large manufacturing operations for multinational companies like South Korea’s Samsung Electronics, Taiwan’s Foxconn, and Japan’s Canon, have raised their concern as they are experiencing pressure in production due to maintaining continuous power supplies during a prolonged heatwave this summer. Some factories were forced to temporarily halt production. Vietnam is boosting its coal imports to fulfill their commitment to investors for ensuring no more power cuts.
Meanwhile, demand from the Philippines has also increased. Exports to Thailand and Taiwan also saw notable growth, with increases of 25% and 26%, respectively.
Country -wise thermal coal exports
Indonesia’s exports to India increased by 15% m-o-m to 10.57 mnt in March, 2024 as against 9.37 mnt in February, 2024. Shipments to China up by 7% to 10.37 mnt in March 2024 as against 9.64 mnt in February, 2024.
Exports to South Korea drop by 32% to 1.54 mnt in March 2024 as against 2.28 mnt in February, 2024. Exports to the Philippines surge by 17% at 2.52 mnt. Shipments to Japan and Malaysia drop by 24% and 4%, respectively.
Port-wise exports
Exports from Taboneo drop by 7% to 5.36 mnt in March 2024 as against 5.75 mnt in February 2024. Shipments from Muara Jawa increased by 19% at 4.57 mnt in March, 2024 as against 3. 83 mnt in February 2024. Supplies from Tanjung Bara and Muara Pantai fell by 17% respectively, in March, 2024.
Outlook
Indonesia’s exports shall increase in the coming months due to higher power demand in India triggered by the full onset of summer. This, along with increased thermal coal exports to other South Asian countries where thermal power is a major source of energy, is expected to boost coal imports from these countries. Additionally, the easing of supply constraints in Indonesia will contribute to a smooth supply of Indonesian coal without delay. All these factors will likely lead to an increase in exports from Indonesia.
Source: Bigmint
