JAKARTA - Indonesia's coal supply situation remains critical, the state utility said, following the country's ban on exports of the fuel that drove up prices in top customer China on Tuesday.
Indonesia, the world's top exporter of the coal used in power plants and China's largest overseas supplier, on Saturday announced the ban on exports during January to avoid outages at domestic generators.
Indonesian authorities are set to reexamine the export ban on Wednesday.
Late on Monday, Indonesia's state-owned electric utility Perusahan Listrik Negara (PLN) warned that "this critical period is not yet over", adding that it continued to coordinate with the government and other coal suppliers.
The utility said it had so far secured 3.2 million tonnes of coal of the 5.1 million tonnes of additional supply for January it needs to avoid widespread outages.
Coal futures in China, the world's biggest consumer of the fuel, surged on Tuesday in a sign of concerns the export ban could threaten energy security in some of the world's biggest economies.
China's benchmark thermal coal futures rose by as much as 7.8 percent in the first day of trading since the policy was announced. The futures closed at 713.80 yuan ($112) a tonne, up 6.4 percent.
It was the biggest daily increase since Oct. 19, when prices climbed to a record 1,848 yuan a tonne amid a supply deficit in China caused by shortages from domestic mines.
If sustained beyond the Wednesday review, Indonesia's ban could pressure China to rethink unofficial import restrictions it has placed on Australian coal.
"If Indonesia’s coal export ban were to be extended, China would need to resort to Australian coal once again, with the latter being a major beneficiary of Indonesia’s coal export ban," said Sabrin Chowdhury, an analyst at Fitch Solutions, part of Fitch Group.
FULL-MONTH BAN 'UNLIKELY'
Pandu Sjahrir, chairman of the Indonesian Coal Miners Association (ICMA), said the group's ten biggest members will help PLN close the supply gap as a "very short-term solution".
A full month ban could be averted by such coordination, said Rory Simington, principal analyst for Asia Pacific coal research at Wood Mackenzie.
"A halt in Indonesia's exports would have a major impact on thermal coal markets but a total ban for January is unnecessary and unlikely to be implemented in our view," Simington said.
"We are expecting 40 million tonnes of Indonesian exports in January and total domestic demand is in the region of 12 million tonnes; addressing any shortfall would require only a fraction of total capacity," he added.
ICMA said in a statement on Tuesday that the group was in discussion with the government to resolve the problem and working with members to fulfil domestic obligations.
"We are optimistic that the supply shortage in some power plants can be resolved soon and we hope that exports can be gradually reopened," it said.
The group said supply was affected by difficulties in securing vessels to transport coal to the state utility.
"The main obstacle in the field that hinders the acceleration of supply distribution is barges availability," it said.
Some smaller miners in Indonesia have declared force majeure on their shipments, the legal term for when a supplier cannot meet a contract because of forces beyond their control, coal traders based in Singapore and India said on Tuesday.
The firms that declared the force majeure were mostly those that had not fulfilled the so-called domestic market obligation (DMO), a coal mining executive in Jakarta said.
Under the rule, miners are required to sell 25 percent of their output to local power plants at a maximum price of $70 per tonne.
Indonesian President Joko Widodo threatened on Monday to revoke the business permits of miners who failed to meet their DMO requirements.
Asia's economic powerhouses China, India, Japan, and South Korea, together received 73 percent of Indonesian coal exports in 2021, ship tracking data from Kpler showed.
($1 = 6.3731 Chinese yuan renminbi)
(Reporting by Fransiska Nangoy and Bernadette Chrisitina Munthe in Jakarta; Additional reporting by Sudarshan Varadhan, Beijing bureau; Editing by Ed Davies and Christian Schmollinger)