JAKARTA, INDONESIA — The future of Indonesia’s coal sector in 2021 appears to be optimistic, in view of a price increase at the opening of the year and high demand from China — an economy that is recovering amid the pandemic.
In a trading session on Tuesday (5 January), numerous coal shares performed well, Bloomberg data showed.
Coal’s benchmark price for January was US$75.84 per ton (S$100.60)—the highest since July 2019.
The price was up 27.14 per cent from that in December last year at US$59.65 per ton (S$79.09).
On the global market, the price of Newcastle coal for the January 2021 contract in the trading session on 5 January went up 0.37 per cent to US$81.5 per ton (S$108.10) as of 3.40 pm West Indonesia Time.
China restricts coal import from Australia
Executive Director of the Indonesia Coal Mining Association (APBI) Hendra Sinadia told CNBC that the price of coal may continue to strengthen in the first quarter of 2021, adding that the upcoming Lunar New Year in February will boost the sale of coal.
Several cities in China have restricted the use of electricity due to coal supply scarcity. Also, Australia’s decision to limit coal import has contributed to the hike in the coal price.
China imports coal from Australia. However, both are involved in a trade war triggered by Canberra’s ban on Huawei and worsened by Australia’s call for an investigation on the origin of COVID-19.
Such a dispute has led to China’s policy to restrict the import of several commodities from Australia.
However, Hendra noted that Indonesia has yet to replace Australia as the primary coal supplier to China, as Australia is a producer of high-calorie coal.
The Indonesian government requires coal miners to sell 25 per cent of their output for domestic needs, as stipulated in the Ministry of Energy and Mineral Resources’ decree.