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Adaro sees demand from SE Asia to drive seaborne thermal coal market

JAKARTA (RambuEnergy.com) – The demand for coal imports in Southeast Asia is expected to drive the global growth of the seaborne thermal coal market, according to PT Adaro Energy Tbk (IDX:ADRO).

“Demand from this region is expected to continue to grow along with the expansion of coal-fired power plants capacity,” Adaro said in its quarterly results report.

It said demand for coal imports in this region, one of the pockets of growth for the global seaborne thermal coal market, increased by 17% year-on-year in 2018 to approximately 79 Mt.

Demand for coal imports was led by Malaysia, the Philippines, Thailand and Vietnam. In nominal term, Malaysia was the region’s largest coal importer with 34 Mt in 2018, a 25% growth y-o-y. Meanwhile, coal imports into Vietnam increased by 44% y-o-y.

Coal originated from Indonesia, US, Russia, Australia covered the increased demand, growing significantly altogether by 7% y-o-y. In Indonesia, according to an official from the Ministry of Energy and Mineral Resources, total coal production reached 528 Mt in 2018, 8% higher than the 485 Mt target.

Indonesia’s flexible supply side plays a key role in the supply of the 4,200 kcal/kg in the seaborne market, according to Adaro.

Although coal market in 2018 started with strong prices, starting in the beginning of the second half of 2018, the international spot prices for coals of CV below 5,500 NAR were corrected downwards.

Macro environment and increased volatility due to governments’ policies controls created significant challenges in the coal market. In spite of that, the global seaborne thermal coal market in 2018 increased by approximately 5% year-over-year (y-o-y) – supported by consumption growth in China, India and Southeast Asia, Adaro, a largest coal producer said.

In the fourth quarter of 2018. the decoupling between prices of Global Coal Newcastle (gCN) benchmark coal and sub-bituminous coal became wider.

The greater supply of the latter was not met by enough demand in the market and hence prices for coal lower than 5,500 kcal/kg NAR were under pressure, with the 4,200 kcal/kg being the most affected. Supply tightness of bituminous coal has kept gCN benchmark price elevated, averaging US$104.20 per tonne in 4Q18. (*)

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