Indonesia is likely to allow 37 loaded coal vessels to be released for export pending requisite approvals from the authorities, sources aware of the development said Jan. 13, two weeks after the country imposed a blanket ban on coal exports due to domestic shortage.
A list of 37 vessels, seen by S&P Global Platts, has been prepared after a meeting of top government officials concluded Jan. 12, allowing owners of these vessels to sail if they fulfill their domestic market obligation, or DMO. Indonesian miners have an obligation to supply 25% of their annual production to the domestic market.
“It is mandatory that the companies [to which these vessels belong] have fulfilled their DMO. The government might change the list of vessels getting clearance if obligations are not met,” an Indonesian miner said.
Sources said that companies that have fulfilled their DMO will be allowed to export. However, market participants said there was no official communication to the miners yet.
“I think they (Indonesian government) are not going to allow exports. All 37 are reputed companies that have fulfilled their DMO, they want to do case-by-case verification for all exports,” an Indonesian trader said.
“Whether companies can now start to export, or the permission is for these 37 vessels only is not clear. The companies have have not received any official letter,” an Indonesia-based producer said.
Sources said that the 37 vessels are estimated to be carrying cumulatively around 1.8 million mt coal. Fifteen of the 37 vessels were headed to China, followed by four each to Japan and India. Rest of the vessels are to head to countries such as Singapore, South Korea, Philippines, Bangladesh and Hong Kong.
Miners said the situation continued to remain uncertain and they would prefer to wait for official communication from the government if they are allowed to export.
Freight operators see limited impact
The Dry bulk freight market is expected to have little impact as a result of a few ships being allowed to sail out of Indonesia with coal.
A Singapore-based shipbroker source pointed out that demand is likely to stay low in the near term, leading rates in the Pacific to lower.
“It is not a very positive news anyway that the government is going to [provide] clearance on a case-by-case basis,” a Panamax ship operator source said.
A Supramax ship operator source estimated that it could take around two-three days for the vessels to actually sail out even after getting the required clearances.
Prices rise for coal of other origin
Indonesia had banned all exports of thermal coal for the month Jan. 1 after state-owned power company Perusahaan Listrik Negara, or PLN, reported critically-low coal stocks at power plants.
On Jan. 10, the government said that since the situation had improved with stockpiles sufficient for 15 days, the decision for relaxation in the export ban would be taken Jan. 12.
Market participants expect prices of coal from other origins to shoot up as China will continue to reject Australian cargoes and supply remains tight from Russia and South Africa. “The only balance side is that China has a new year and they usually don’t buy coal in the run up to it,” an Indonesian trader said.
The price of Australian 5,500 kcal/kg NAR with 23% ash content has risen by $19.50/mt FOB since Dec. 31 to settle at $123/mt FOB Jan. 12, Platts data showed.
The price of Indonesia’s 4,200 kcal/kg coal has risen since Dec. 31 on expectations of tight supply in the coming days. Platts had assessed the price of the grade at $66.25/mt FOB Jan. 12 as against $63.45/mt Dec. 31.