Indonesian coal miners may produce less coal this year in an attempt to turn around the drop in commodity prices, presenting another challenge to the depressed dry bulk shipping market.
The Indonesian Coal Mining Association has said that it believes that coal production will total 350-400 million tonnes this year, which would mark a decline of 58-108 million tonnes from 2014.
That works out to a year-on-year (y/y) decline of 12.66-23.58%, based on the 458 million tonnes produced in 2014.
Indonesia is the world’s biggest coal exporter and producer, with key importers being China and India.
The anticipated decline in Indonesia’s coal output coincides with an expected drop in China’s coal demand due to slowing economic growth and its growing use of LNG in its energy mix.
While India is raising coal imports, this would not be adequate to make up for the decrease in China’s coal imports.
Dry bulk consultancy Commodore Research said, “A y/y decline of 58-108 million tonnes of Indonesian coal production fits into the 81.6-101.6 million tonnes drop in overall Chinese coal imports we predicted. We also continue to believe that Indian imports will increase by 20-25 million tonnes this year, which combined with our expected range of decline for overall Chinese coal imports works out to total overall coal imports from China and India falling this year by 56.6-91.6 million tonnes. This figure is very much in line with the Indonesian Coal Mining Association anticipated decline in coal production.
“Overall, we remain very concerned for 2015 Chinese coal import demand.”