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It remains unclear as to when the partial export ban will be lifted. The country’s lawmakers have opened a probe into the decision, including a look at its economic repercussions
THE costs of shipping coal from Indonesia, including freight, insurance and demurrage, will go up as the government maintains a partial ban on the export of the energy commodity.
Siswanti Rusdi, director of Indonesia’s National Maritime Institute, said that aside from elevated shipping and related charges, the country’s international stature in terms of costs of doing business is being adversely affected.
While the government eased the export ban on January 11 and gave the green light to 37 bulkers to resume shipments, the issue of whether contractual agreements would be honoured in the country remains in doubt, he said.
These doubts persist in the absence of clear-cut indications from the government as to whether or not the export ban would be extended beyond the end of this month, he added.
“Ultimately, the increased costs of doing business with Indonesia, including freight, insurance and demurrage will be passed on to coal importers, and this is not good for the country,” he said.
Energy ministry officials will decide which export quotas are to be issued under a stricter regime and supply requests by various importing countries
He said that no party, neither the government nor the private sector, has yet quantified the adverse impact of the export ban in terms of elevated costs of doing business by shippers, coal mines and other parties.
Demurrage costs are piling up as about 150 vessels remain anchored off Kalimantan as they await clearances to sail, Mr Rusdi said. The demurrage of a handimax costs about $20,000 a day, while that of a panamax is double at about $40,000.
The continuing partial ban on coal exports has raised concern among the country’s lawmakers, who met today with leaders of the coal mining industry in their bid to find out what led to the export ban and how its repercussions may pan out, according to an industry source.
An energy ministry source earlier said the failure of various coal miners to supply enough coal to domestic power plants, notably state-owned power utility Perusahaan Listrik Negara, raised the prospect of widespread power outages in the country and led to the export ban.
The government cited the inability of various miners to supply enough coal under the so-called domestic market obligation scheme to domestic power producers.
The move is expected to cause a ripple effect on dry bulker shipping as Indonesia is the world’s largest exporter of thermal coal. About three-fourths of China’s imports came from the Southeast Asia country last year
Morgan Stanley analysts have warned in a research note that losing 40% of the seaborne coal market amid peak winter demand in the west following Indonesia’s export ban could result in a fresh spike in the price of the commodity.
Last October, coal prices soared to a record $270 per tonne. The commodity is now trading at $152 per tonne amid tight supply. The American bank has predicted the average price of Australia’s benchmark Newcastle coal at $140 per tonne in the first quarter of this year if Indonesia’s export ban remains in place.
Australia’s Department of Industry, Science, Energy and Resources has forecast the southeast Asian country to remain the world’s largest exporter this year of thermal coal. It foresees Indonesia exporting this year 482m tonnes of coal, followed by Australia with 204m tonnes and Russia with 171m tonnes.
While Indonesia is widely expected to retain its stature as the world’s largest thermal coal exporter this year, President Joko Widodo has vowed to ensure that domestic coal users, especially the country’s power producers, are not deprived of adequate supply.
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Subject: Indonesia’s coal export ban will raise shipping costs
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This copy is for your personal, non-commercial use. For high-quality copies or electronic reprints for distribution to colleagues or customers, please call UK support at +44 (0)20 3377 3996 / APAC support at +65 6508 2430
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