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As per the IHS Markit's Commodities at Sea, Indonesian
coal shipments during June 2021 stood at 35.3mt (up 25 percent
y/y). In terms of regions, shipments from East Kalimantan, South
Kalimantan, and Sumatra stood at 18.9mt (up 9 percent y/y), 11.0mt
(up 56 percent), and 3.7mt (up 61 percent), respectively.
Renewed COVID-19 outbreaks are slowing the economic recovery in
the country and putting pressure on fiscal shortfalls. However,
there is an increase in taxes from coal exports due to an increase
in international demand in addition to the surge in coal prices. As
per the Ministry of Energy and Mineral Resources of Indonesia, the
monthly benchmark coal price (HBA) basis, 6300 GAR surged further
in July 2021 and announced at $115.35/t (highest since November
2011), up 15 percent m/m and 121 percent y/y. HBA prices after
bottoming out in September 2020 have been on an upward trajectory
driven by strong demand from China (Mainland) and lately from Japan
and South Korea.
Indonesian coal shipments during June 2021, to Mainland China,
which accounts for 53 percent of total Indonesian coal export,
stood at 18.6mt (up 15 percent m/m, and 70 percent y/y). While
shipments to India stood at 4.5mt (down 25 percent m/m and 14
percent y/y). Shipments to South Korea, Japan, Malaysia, and Taiwan
stood at 1.5mt (up 20 percent m/m, but still down 13 percent y/y),
1.1mt (down 21 percent m/m, and 39 percent y/y), 2.2mt (up 22
percent m/m, and 31 percent y/y), and 1.9mt (down 13 percent m/m,
and 7 percent y/y), respectively.
The surge in Indonesian coal shipments to Mainland China is an
attempt by the utilities in the Mainland to build stocks ahead of
peak season coupled with an ongoing informal ban on imports of
Australian coal. Shipments to India declined as buyers increased
their reliance on Australian thermal coal.
In terms of vessel demand, during June 2021, there were
increased loadings on Newcastlemax (0.6mt, versus no shipment a
year ago), Capesize (2.3mt, up 99 percent y/y), Mini Cape (0.8mt,
up 717 percent), Kamsarmax (5.2mt, up 14 percent), Panamax (12.6mt,
up 30 percent), and Supramax (6.7mt, up 12 percent). Shipments
declined on Post Panamax (2.9mt, down 7 percent y/y) and Ultramax
(1.8mt, down 5 percent).
Overall, during the first six months of 2021, Indonesian coal
shipments stood at 203.2mt (up 6 percent y/y). In terms of regions,
shipments from East Kalimantan, South Kalimantan, and Sumatra stood
at 109.9mt (up 3 percent y/y), 60.2mt (up 4 percent), and 23.0mt
(up 35 percent), respectively.
In terms of major destinations, during 1H2021, there was an
increase in shipments only to Mainland China (87.5mt, up 31 percent
y/y) and Taiwan (11.6mt, up 12 percent); while declined to Japan
(10.5mt, down 28 percent), South Korea (9.1mt, down 21 percent) and
Malaysia (11.7mt, down 11 percent). Shipments to India were mostly
flat and at almost previous year levels of 42.0mt.
In terms of vessel segment, during the first half of 2021, there
was a surge in loadings on Panamax (67mt, up 18 percent), and
Capesize (17.8mt, up 31 percent). Indonesian coal shipments
declined on Kamsarmax and Supramax, which stood at 24.1mt (down 8
percent y/y) and 39.8mt (down 11 percent), respectively.
Short-Medium term outlook
For the first 10 days of July 2021, Indonesian coal shipments
stood at 17.6mt (52.9mt on a 30-Day basis, up 93 percent y/y). In
terms of exporting regions, on a 30-day basis, East Kalimantan,
South Kalimantan, and Sumatra stood at 30.4mt (up 92 percent y/y),
15.8mt (up 116 percent), and 4.6mt (up 69 percent), respectively.
The calculated PACE is quite high and is expected to slow down in
the remaining days of the month.
Indonesian coal shipments for July 2021 are forecast at 38.4mt,
with shipments to Mainland China, India, South Korea, and Japan are
calculated at 19.5mt, 4.5mt, 2mt, and 2.2mt, respectively.
Indonesian coal shipments to Mainland China have remained quite
strong as domestic supply is reported to be below levels as the
country enters the peak summer season. Lately, there are reports of
strong electricity demand in Mainland China due to high
temperatures.
For 3Q21 and full 2021, Indonesian coal exports are forecast at
109mt (up 33 percent y/y) and 414mt (up 10 percent y/y),
respectively. In terms of imports countries during 3Q21 and 2021,
shipments to Mainland China, India, South Korea, and Japan are
forecast at 50.9mt/174mt, 14.5mt/77mt, 6.6mt/22mt, and 7mt/25mt,
respectively.
Minister of Finance Sri Mulyani Indrawati on 28 June 2021
presented to parliament major amendments to Indonesia's main tax
law to increase government revenue and reduce greenhouse gas
emissions. The government's amendments to the General Principles of
Taxation bill proposed an increase to the rate and scope of
value-added tax (VAT), a new carbon tax, an increase to the
top-rate of personal income tax, and the introduction of another
round of the tax amnesty program.
The bill proposes a minimum carbon tax rate of IDR75 (USD0.0052)
per kg of CO2 equivalent of emissions. The bill only stipulates
that a carbon tax shall apply to goods that contain carbon or
activities that produce carbon emissions. The sectors to be taxed
and the rate that will be imposed on specific goods and industries
will be elaborated in government regulation on carbon pricing that
is currently being drafted and through further ministerial-level
regulations. Associations representing coal, petrochemical, and
cement industries are opposed to the carbon tax. Although they are
unlikely to be able to stop its imposition on their sectors, they
will probably seek a lower rate and exemptions or delay its
implementation at least until the COVID-19 pandemic is better
controlled.
