Indonesia is the world’s third-largest coal producer as well as one if its largest net exporters – accounting for over 40% of total world steam coal exports in 2015. The island nation primarily exports to China and India, which compete to import low-grade Indonesian coal. Indonesia is China’s largest supplier, with China’s import levels from Indonesia serving to determine Indonesian coal prices. IHS Markit launched the Indonesian sub-bituminous index in 2010 and offers detailed pricing for two other types of Indonesian coal types as well.
With China as one of its main customers, Indonesia has suffered from China’s economic slowdown and India’s failure to fill the gap as the latter turns increasingly to domestic suppliers. The 2015 decrease in Asian demand for coal hit Indonesian suppliers the hardest, wiping out three years of growth. At the same time, Indonesian suppliers face growing competition in other key markets, where overreliance on Indonesian coal has surfaced as a concern, and South Africa and Columbia are emerging as attractive alternative supply sources.
Still, Indonesian coal presents massive potential: In 2013, the country had 28 BMT of bituminous and sub-bituminous coal. Its reserves are young albeit of low calorific value. With its ample infrastructure, the country has not only been able to supply low-grade coal to China and India, but also much of Southeast Asia and Korea. IHS Markit expects Indonesia to continue to play a key role in providing for these demand centers with thermal coal exports reaching 367MMT by 2020 and steadily increasing through 2040.
You can find detailed Indonesian coal market data and forward-looking insight through our APAC and African Coal Market News and Analysis, including: