Indonesian Coal Exports Rise 32% On Asia Demand

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Indonesian coal exports surge 32% on strong Asia demand, states a CBS news source.

Indonesian seaborne coal exports

“Indonesian seaborne coal exports are expected to surpass 170 million tonnes by the end of April, up 32% on the same period last year. The rise is partly due to improved economic conditions in China and an increase in energy demand as a result,” says Filipe Gouveia, Shipping Analyst at BIMCO.

During the first four months of 2023, Indonesian coal exports to China are estimated to have risen 65% y/y. The Chinese economy is performing significantly better than last year when strict COVID restrictions were in place. As a result, industrial activity has increased, boosting coal demand. Coal supply has also improved as Indonesian coal exports have not been restricted by an export ban which was in place in January 2022.

“The surge in coal exports is supporting rates for panamax and supramax ships which transport 85% of Indonesian coal. Earnings in both segments remain higher than pre-COVID levels but have weakened significantly compared to 2022,”says Gouveia.

Indonesian coal exports account for 19% and 11% of all cargo transported by panamax and supramax ships respectively. The higher coal volumes have helped offset weaker grain and minor bulk volumes. However, due to shorter coal hauls, freight rates for the two segments have still been impacted negatively.

Higher demand for Indonesian coal

Higher demand for Indonesian coal has also been seen in other smaller economies in East and Southeast Asia. Coal prices have started to cool from record high levels in 2022, improving its attractiveness in price sensitive economies such as the Philippines and Vietnam. Additionally, spill over effects of China’s economic recovery have been seen in South Korea. Chinese demand for South Korean industrial goods has increased, leading to higher South Korean coal imports.

India is the second largest destination for Indonesian coal, but unlike other destinations, exports from Indonesia have slightly decreased so far this year. Although India’s total coal imports have increased, Indonesian coal face increased competition from Russian coal. Since voyages to India from Russia are double the distance compared to those from Indonesia, ships are employed for longer.

“High temperatures in India are already causing record high electricity demand. As the summer approaches, electricity demand could further firm up in both India and China due to air conditioning. This, coupled with China’s economic recovery, could ensure high coal exports from Indonesia during the coming months,” says Gouveia.

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Source: Xinde Marine News