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2023 Indonesian
Coal Exports to
Reach Historic High

Source: China Coal Economic Research Association

Date: 2023-11-17

On November 9th, it was reported that for the first 10 months of 2023, Indonesia’s thermal coal exports exceeded 413 million tons, setting a new record and solidifying its position as the largest exporter of thermal coal. Indonesia’s coal exports grew by 11.5% compared to the same period in 2022, nearly double the global growth rate of coal exports.

As a result, despite efforts by several major economies to transition their energy systems away from fossil fuels, global coal exports are expected to reach a new high in 2023.

According to data from Kpler, Indonesia has, for the first time, captured over 50% of the global thermal coal export market share, reaching 50.2% from January to October this year. This indicates that the country has successfully taken away some market share from its competitors.

The export volume and market share of thermal coal from Indonesia in the period of January to October.

In the first 10 months of this year, the market share of Australia, the world’s second-largest coal exporter, decreased from 20% in the same period of 2022 to 19.4%. Meanwhile, the market share of Russia, the third-largest exporter, decreased from 12.3% to 11%. The export shares of the fourth and fifth-ranked exporters, South Africa and Colombia, were also taken over by Indonesia. The market share of the sixth-largest exporter, the United States, saw a slight increase.

China (including Hong Kong) is the largest destination market for Indonesia’s coal exports. In the first 10 months of this year, China imported 182.5 million tons of coal from Indonesia, marking a 33% increase compared to the same period in 2022, and accounting for 44.2% of Indonesia’s total coal exports.

Changes in the destination markets for Indonesian coal exports

India is the second largest buyer of Indonesian coal exports, accounting for approximately 20% of the total volume (82 million tons in the first 10 months); the Philippines is Indonesia’s third-largest export market, with a 7.2% share (30 million tons).

Japan, South Korea, and China Taiwan are also major buyers of Indonesian coal. Similar to mainland China, it is expected that in the final months of the year, as these countries and regions experience a seasonal increase in heating and power demand, utility companies will replenish coal stocks, leading to an increase in coal imports.

A key factor in the growth of Indonesia’s coal export market share is that, compared to higher-grade coals sold by competitors such as Australia, Indonesian coal has lower calorific value and is relatively cheaper.

According to LSEG data, the average price of Indonesian 4200 kcal/kg NAR coal grade stood at about $65 per ton as of October. 

In contrast, coal with a calorific value of 6200 kcal/kg NAR shipped from Newcastle, Australia, has an average price of $184 per ton.

Indonesia vs Australia thermal coal prices

Coal export prices from Colombia, South Africa, Mozambique, and Russia generally fall between the prices of coal from Indonesia and Australia, highlighting Indonesia’s sustained price advantage over other countries due to the lower grade of coal it exports compared to coal from other countries.

For major coal-consuming countries like China and India, Indonesian coal exports also possess a very clear freight cost advantage, making Indonesia the most popular supplier of coal for cost-sensitive coal importers throughout Asia.

Changes in Indonesian coal export prices

According to data from the Shanghai Shipping Exchange, the current freight rates for exporting coal from Indonesia to China are approximately $8 to $10 per ton, while the rates from Australia to China are around $14 to $15 per ton.

In terms of shipping time, the voyage from Indonesia to major coal import centers such as China and India is approximately half that of the journey from Australia. This gives Indonesia an incomparable advantage in spot trading for emergency coal purchases by importers.

The combination of this close geographical proximity and lower prices seems poised to further expand Indonesia’s coal exports in the remaining months of this year, particularly as coal consumption in the northern hemisphere approaches its peak.

The recent decline in coal prices in Australia to the lowest levels since mid-2021 is expected to pique the interest of utility companies in purchasing high-calorific value coal from Australia. This interest stems from their desire to maximize power generation while controlling emissions.

For power producers that continue to prioritize generating electricity at the lowest possible cost, procuring coal from Indonesia will remain their top choice.

This also means that Indonesia’s coal exports for the full year of 2023 are likely to break previous annual export records, reaching historically unprecedented highs.

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