Indonesia puts off talks on coal exports ban as China futures surge

Indonesian officials postponed a crucial meeting on Wednesday that was set to take place with coal miners to discuss a ban on coal exports, as coal futures in China surged and scores of ships moored off the Indonesian coast due to load remaining in limbo.

Indonesia, the world's top exporter of thermal coal and China's largest overseas supplier, on Saturday announced a ban on exports in January to avoid outages at domestic generators run by state-owned utility Perusahaan Listrik Negara (PLN).

The decision followed calls by the government in recent weeks to coal producers to meet their domestic market obligations (DMO), under which suppliers have to dispatch at least 25 percent of their output to the domestic market.

Indonesian authorities had earlier said they would review the export suspension on Wednesday, which if prolonged could threaten energy security in some of the world’s biggest economies.

Coal miners had been scheduled to meet Indonesian trade minister Muhammad Lutfi on Wednesday morning, but talks did not take place, Reuters reported citing officials at the Indonesian Coal Miners Association (ICMA). The officials said no new meeting time had been agreed and it was unclear why the meeting was postponed.

The decision has roiled global markets since Indonesia exported around 400 million tonnes in 2020, with its biggest customers being China, India, Japan and South Korea.

Coal futures in China, the world’s biggest consumer of the fuel, surged on Tuesday – among the first signs of the impact of Indonesia’s coal export ban. The benchmark thermal coal futures rose by as much as 7.8 per cent in the first day of trading since the policy was announced and traded at US $155 a tonne – the highest since December 20.