Recently, executives of large Indonesian coal companies said that Indonesia’s coal demand is expected to remain strong in 2024, driven by stable demand from major importing countries such as China, India and Europe.
Alexander Ery Wibowo, director of Indonesian coal producer Bayan Resources, said India’s demand for Indonesian coal is particularly resilient in terms of coal exports, as is China and Europe. He said that with the commissioning of new coal-fired power plants, Indonesia’s domestic coal consumption is also expected to increase. Although demand growth is less pronounced, it still shows signs of stabilization.
Bayan Resources said that despite fluctuations in global coal prices, the company’s performance expectations in 2023 are still positive. The company said it expects that global coal (Newcastle 6,000 kcal thermal coal) prices are unlikely to fall below $100/ton this year due to continued buyer demand.
“Because demand is expected to improve, there is no sign that coal prices will fall below US$100 per ton. At the same time, domestic demand is also increasing and coal companies’ production costs are high, which still provides certain support for coal prices.” Wibowo said.
However, the relative oversupply in the international market and weak coal demand in China caused coal futures prices to fall in early February. The March contract of thermal coal futures at the Port of Newcastle on the Intercontinental Exchange (ICE) closed at US$119.9/ton, a price that has been below US$120/ton since the end of January.
Some analysts predict that by 2024, the global coal supply glut will continue to put pressure on coal prices. Weak demand, especially from China, and relatively abundant supply are expected to drive coal prices back down, but still above pre-pandemic levels in 2019.
Indonesia is the world’s largest thermal coal exporter, mainly supplying coal to countries such as China, India, Japan and South Korea. While some importing countries are taking action to reduce their long-term dependence on coal, demand for Indonesian coal imports will remain strong in the short term given that many Asian economies still rely heavily on coal-fired power generation.
