China’s coal futures rise after Indonesia’s export ban

Before the review of the export ban announced by Indonesia last week, China’s coal futures rose on Tuesday. Indonesia is one of the world’s largest exporters of fossil fuels, raising concerns about a chain reaction to the global economy.

Compared with Friday’s closing price, the most actively traded contract on the Zhengzhou Commodity Exchange rose by 8% on Tuesday, and several other contracts also rose by more than 6% during midday.

Indonesia’s state-owned utility supplier said on Monday that the country’s coal supply situation is facing a “critical period”. Earlier, the Department of Energy announced over the weekend that the government would seek to ban coal exports in January.

The Ministry of Energy stated that the ban will help avoid power outages in power plants operated by the national utility company PLN. After the global pandemic caused supply shortages, the ban intensified concerns about further increases in commodity prices.

Not only China’s largest foreign company Source of coal, Indonesia is also an important supplier to India and Southeast Asia. In September, China provided more than 21 million tons of coal to China, up from 17 million tons in August.

Warren Patterson, head of commodity strategy at ING, said: “This move may have a knock-on effect on China and India, which are common destinations for Indonesian coal.”

During the pandemic, China’s coal prices were particularly volatile. As China’s economic recovery increased demand and the lockdown measures to combat the Delta Coronavirus variants restricted supply, October futures prices soared to 2,301 yuan (US$362). . In contrast, most of the contracts traded in Zhengzhou on Tuesday were about RMB 700.

After Beijing took measures including instructing domestic miners to increase production, China’s coal prices subsequently fell.

In a statement on Monday, PLN stated that with the help of the government, it had received a pledge to supply 3.2 million tons of coal to its factory in January. But it said that it needs an additional 5.1 million tons in total to avoid widespread power outages in the country.

It warned that ensuring the supply is in the “national interest” should be “prioritized” before ministers review the ban on Wednesday.

President Joko said that the supply of PLN is “necessary” and called on coal producers to meet domestic demand before exporting.

Morgan Stanley analysts said that the potential loss of Indonesian coal exports, which account for about 40% of the so-called maritime market, could trigger a coal price increase similar to that in October.

At that time, the price of high-energy Australian coal, the benchmark for the Asian market, rose to a record high of more than US$270 per ton. The current transaction price is approximately US$150 per ton.

Morgan Stanley analysts said: “That is to say, the meeting between the government and miners is scheduled for January 5, but it is still possible to reassess/fine-tune the export ban.”

Due to the news of the Indonesian ban, the stock price of Whitehaven Coal, one of Australia’s largest independent coal suppliers, rose 5.8% to A$2.76 on Tuesday. Glencore, which is listed in London, also rose 3.3% in early trading, and the company also operates coal mines in Australia.

Source link

Leave a Reply

Your email address will not be published.