While everyone was immersed in the joy of the New Year’s Day holiday, on December 31, 2021 local time, the Indonesian government suddenly announced that in order to alleviate the domestic coal supply shortage, coal exports would be stopped from January 1 to January 31, 2022. In order to avoid insufficient power supply in the country.
As the world’s largest thermal coal exporter and my country’s largest coal/thermal coal import source, Indonesia’s move will undoubtedly tighten the global coal supply market.
Many people in the industry are worried that the domestic wave of power and production restrictions may strike again, and the production capacity of many companies will be further compressed! Some even said that the power cuts in the hot summer will happen again in the cold January?
Indonesia’s ban affects 60% of China’s imported coal supply
Pushing global coal prices higher in coming weeks
Indonesia is the world’s largest thermal coal exporter, with exports in 2020 reaching approximately 400 million tons. At the same time, Indonesia is my country’s largest coal importer: data from the General Administration of Customs show that from January to November last year, it imported a total of 290 million tons of coal, and Indonesia supplied 178 million tons to China, accounting for about 61%.
Screenshots from Indonesian media reports
Reuters quoted data as saying that Indonesia is the world’s largest thermal coal exporter, with exports reaching approximately 400 million tons in 2020, mainly to China, India, Japan and South Korea. Data released by the National Bureau of Statistics of Indonesia show that from January to October last year, Indonesia exported a total of 360 million tons of coal, of which thermal coal exports reached 265 million tons.
At the same time, Indonesia is my country’s largest coal importer.
The latest data released by the General Administration of Customs shows that in November 2021, my country imported 35.052 million tons of coal, an increase of 23.381 million tons from 11.671 million tons in the same period last year, an increase of 200.33%. Compared with 26.943 million tons in October, it increased by 8.109 million tons, an increase of 30.10%.
Judging from the import volume of various coal types, thermal coal is still the coal type with the largest import volume in my country in November 2021. The import volume of general thermal coal (including other coal, other bituminous coal and lignite) accounts for 74.72% of the total import volume.
Data show that in November 2021, Indonesia exported 19.5 million tons of coal to China, accounting for 55.95% of total imports. In October, Indonesia exported 15.56 million tons of coal to China, accounting for 58.22% of total imports. The proportion of imports decreased compared with October. 2.27%.
From January to November 2021, my country imported a total of 292.321 million tons of coal, a year-on-year increase of 10.6%, and the growth rate was 8.7 percentage points higher than the previous 10 months. Among them, Indonesia supplies 178 million tons to China, accounting for about 61%.
Picture from China Coal Market Network
According to the Chinese Embassy in Indonesia, not long ago (December 21, 2021), many Chinese companies and Indonesian coal companies signed another order at the 2021 China Import Coal Summit, and China will continue to import coal from Indonesia.
Industry analysts at Bank Mandiri predict that Indonesia’s export ban will push up global coal prices in the coming weeks as coal inventories decline.
According to a report by Indonesian news website Kumparan on the 1st, the Indonesian Ministry of Energy and Mineral Resources website issued a statement on December 31, 2021, informing all coal mining companies about the country’s recent tight coal supply, saying that this may have a negative impact on the national power system. Influence. The statement read that coal supply for household electricity is now in very short supply, and insufficient power supply may affect 10 million household and industrial users. “If strategic action is not taken, widespread power outages may occur (in the country).” Indonesia’s Minister of Energy emphasized in a statement.
Power cuts + export ban + electricity price increases in many provinces
It may implicate many enterprises upstream and downstream of the industrial chain.
Data show that from January to November 2021, China imported a total of 292.321 million tons of coal, a year-on-year increase of 10.6%, and the growth rate was 8.7 percentage points higher than the previous 10 months. In other words, China’s domestic coal supply cannot be guaranteed, leading to increasing imports.
Industry insiders analyzed that January and February are winter in China and are also the main months for coal imports. In the first 11 months of 2020, the highest single-month coal import was 34.8 million tons in January, followed by 33.26 million tons in February. At present, China’s port inventory is already running low.
According to data from the China Coal Resources Network, as of December 31, 2021, the coal inventory in Qingang was 4.74 million tons, a decrease of 350,000 tons from the same period last week, a decrease of 660,000 tons from the same period last month, and a decrease of 310,000 tons from the same period last year. Ton.
It can be seen from the data that inventory has been declining recently. Coupled with the news that Indonesian coal exports were banned in January, it is very likely that coal will tighten in the short term.
Indonesia’s coal varieties are mainly used for thermal coal for power generation, but there is a sudden 75% gap. Will the power cuts in the hot summer happen again in the cold January?
Recently, news circulated online from a company in Wenzhou City, Zhejiang Province, saying that due to the impact of dual energy consumption controls in January 2022, the industrial park where the company is located plans to have a power outage from January 17th to January 31st.
As of now, the country has not released the completion status of the dual energy consumption control indicators for each province in 2021. However, in the context of the dual carbon goals of “carbon neutrality” and “carbon peaking”, dual energy consumption control will be an urgent need for major chemical industry provinces. Therefore, the problem of electricity consumption will continue to affect major small and medium-sized enterprises.
In September 2021, coal prices remained high, which provided obvious support for the price of polyester raw materials at that time. After returning from the New Year’s Day holiday, on the first trading day of 2022, the coal sector led the futures market, with thermal coal rising 6.38% during the day and the main ethylene glycol contract rising by more than 2%. Stimulated by the short-term benefits of thermal coal and the continued strength of international crude oil, the focus of the ethylene glycol market has shifted upward.
From the current point of view, polyester raw materials have seen a good rise in recent times, boosted by oil prices and equipment maintenance. The shortage of coal supply may provide better opportunities for growth of polyester raw materials such as ethylene glycol.
At the same time, according to media reports, many provinces in China announced that they will increase time-of-use electricity prices by up to 70% starting from January 1, 2022. The industrial and commercial electricity prices in Shandong Province fluctuate between 50% and 170% of the benchmark price, with an increase of 70% during peak periods and a decrease of 50% during trough periods; the peak and trough periods for residential and agricultural electricity consumption in Gansu and Yunnan Province fluctuate by 50% each on the basis of parity. In Jiangxi Province, electricity prices will be increased by 50% during peak hours, and electricity prices during peak hours will be increased by another 20% based on peak hour electricity prices. Shanxi’s electricity prices increased by 60% during peak hours.
Most of the provinces affected by the electricity price increase are major towns in the chemical industry, which is expected to have a direct impact on local companies. The operating costs of companies will increase, which may affect many companies upstream and downstream of the industrial chain.
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