Bank Mandiri: Coal Exports Grow Dominated By Demand From China

JAKARTA - PT Bank Mandiri Tbk. reported that the volume of coal exports throughout June 2021 grew 14.4 percent year-on-year compared to the same period 2020.

Bank Mandiri Chief Economist Andry Asmoro was driven by an increase in export performance to China. In his record, Indonesia's coal exports to the East Asian country shot 50.7 percent yoy with a volume of 18.8 million tons.

"This increase is driven by the relaxation of China's import quota, which is intended to increase its thermal coal stock in facing the summer period," he said in an official broadcast, Friday, August 27.

Meanwhile, the volume of coal exports in June 2021 to several main export destination countries decreased.

The volume of Indonesia's coal exports to India, Japan and South Korea contracted by minus 23.8 percent, minus 45 percent, and percent by 25.92 percent yoy, respectively.

"In addition, in June 2021 the market share of Indonesian coal in China was 59.9 percent of China's total imports, higher than the previous month which was 53.3 percent," he said.

However, compared to May 2021, coal exports decreased slightly to 36.7 million tons from 37.7 million tons.

Cumulatively from January to June 2021, export volume grew by 2.4 percent yoy with a total export volume of 213.3 million tons.

"The conditions that occurred in the first half of this year compared to the export volume of the same period in 2019 were still lower with 229.6 million tons," he said.

Furthermore, the state bank economist explained that the estimated average price of coal in 2021 is 104.3 US dollars per tonne.

“In the future, we are of the view that prices will correct for several reasons. First, China's domestic coal stock is slowly increasing. Second, tapering in the United States is predicted to occur more quickly starting at the end of 2021, which will suppress US dollar liquidity and reduce the speculative effect on the market,” he said.

“In addition, we also see several risk factors that could interfere with Indonesia's coal export performance. First, dependence on China's coal demand will make Indonesia's coal export performance very vulnerable to China's coal import policy. Second, there is tighter competition with Australian coal in the Indian market because Australia's penetration in the Indian market is more intensive,” concluded Andry.