Indonesian embargo leads to growth of global prices for coal

Photo: Maxim Shipachev

The embargo on the exports of thermal coal from Indonesia, which was introduced at the end of last year, led to an increase of global prices by 15-20% and, according to some analysts, may create conditions for another energy crisis.

 

The sudden suspension of coal exports from Indonesia due to the December 31 embargo has supported global coal prices. Thermal coal in North-Western Europe CIF ARA has grown in price by 22% since the beginning of the year, while thermal coal FOB Newcastle (Australia) – byh 13%.

 

 

Indonesia, which accounts for more than 40% of global thermal coal exports, has imposed a month-long export ban amid fears that a shortage of coal at local power plants could lead to power outages. At that time, coal reserves at some state-owned power plants, PT Perusahaan Listrik Negara (PLN), had dropped to critically low levels.

 

That led to the growth of prices due to existing plans of Indonesia to restrict exports for the entire January.

 

However, Indonesia's Ministry of Maritime Affairs and Investment announced on January 10 that coal reserves for public utility power plants had reached acceptable levels and the supply gap had now been filled. That means that the government will consider the possibility of resuming exports.

 

By: Eugene Gerden