Bulkers Wait Offshore as Indonesia Prepares to Lift Coal Export Ban
Indonesia appears ready to lift its ban on the export of coal just a week after sending shockwaves through the world markets saying it was suspending all export shipments for a month. As the largest exporter of thermal coal in the world, Indonesia was expected to ship at least 35 mt of coal in January going to major customers including China, India, Japan, and South Korea.
Reporting that domestic coal supplies were running low, the Indonesian Ministry of Energy said on December 31 that it would be suspending all export licenses for the month of January to permit time to rebuild the inventories at domestic plants and while the government accessed the long-term situation. The government said it was necessary to ensure that they would not be experiencing domestic power shortages. Experts expressed concern on China in particular which imports large quantities of coal and large turned away from Australian coal in 2020 in a political dispute. Reports however said that China and South Korea had large stockpiles but Japan immediately asked the Indonesian government to revoke the shipment ban.
Tracking services reported large buildups of bulkers anchored off Indonesia’s large export port on the island of Borneo. By some estimates, there were as many as 100 ships by mid-week idle offshore while VesselsValue released tracking data showing a dramatic falloff in bulker departures from Indonesian ports. However, they were also a dramatic increase in the number of domestic coal shipments.
CNBC Indonesia is quoting the Minister for Maritime and Investment Affairs saying that the immediate crisis is over. He said that the domestic supplies had been replenished fulfilling the immediate needs of the power industry. However, discussions were reported to be ongoing regarding longer-term solutions to maintain a consistent supply for domestic needs.
Reports are split, however, if Indonesia has in fact ended the export ban. Reuters is saying that discussions are ongoing between the government and coal miners intending to resolve issues and hopefully ending the export ban by possibly over the weekend or the beginning of the week. Reports at Lloyd’s however are saying that the government has quietly begun to renew export licenses that had been suspended at the beginning of the week.
Global markets remain volatile with prices increasing nearly 10 percent in China on the first day of trading after the ban. However, by mid-week prices were already reported to be stabilizing based on the reports that it would be a short-term imbalance. All eyes remain on the Indonesian government waiting for official word of a resolution and when shipments will resume. It is unclear how long it will take to clear the large backlog of ships at anchor at the coal export ports.