Some analysts are sure that global coal prices will still be under pressure until the end of this year due to the weak demand from China and India along with the oversupply in the market.
Hendra Sinadia, head of the Indonesian Coal Producers Association, commented that at the moment, the market is under a supply glut mainly from Indonesia and Australia. However, demand is slumping which might cause the prices to be under pressure until the end of this year.
A benchmark for Asia-Pacific coal trade the Global Coal Newcastle index has shown a drop by more than 20% year-to-date at USD50.25/t. Likewise, Indonesian coal reference price was set at USD52.98/t last month, down by 20% from January level.
Demand from the world’s biggest coal importers, China and India, is expected to keep its low position amid the measures on limiting the spread of coronavirus. The two countries accounted for more than half of Indonesia’s coal exports in 2019.
China, notably, might be still willing to purchase Indonesian coals, but at a reduced price. It would still likely buy more than India. Therefore, Indonesia is risking a prolonged period of lower coal prices.
Sinadia added that many Indonesian coal producers are unlikely to cut output amid fear of losing market share. However, around half of Indonesia’s major producers were still making money.
