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Volkswagen Sales In China Stall In 2022

Volkswagen Sales In China Stall In 2022

Volkswagen announced this week that…

Coal Prices Dive As Indonesia Signals Easing Of Export Ban

Benchmark Chinese coal prices fell to the lowest since the start of the year this week, after Indonesia allowed some coal cargos to leave its ports in a signal that it may reconsider a ban on exports.

Earlier this month, Indonesia, the world’s largest coal exporter, imposed a temporary ban on overseas shipments on worry it might not have enough to supply the local market.

President Joko Widodo had also threatened miners with business license revocation should they fail to supply enough coal for domestic consumption.

The move prompted fears of disruptions on global energy markets, with Morgan Stanley analysts noting that an Indonesian ban on coal exports would effectively remove some 40 percent of the seaborne coal market overnight during peak consumption season in the northern hemisphere.

The government of Indonesia will discuss the ban again on Wednesday but said it had released the 14 coal cargos because the buyers had already paid for them.

“No more export ban means that the Indonesia coal miners should resume normal activity,” Citigroup analyst Justian Rama said in a note, as quoted by Bloomberg. “There could be some retreat or weakness in the coal price.”

Such a retreat would provide relief for the coal markets, which have seen surging prices since late last year as Europe sank deeper and deeper into its energy crisis, struggling with record-shattering natural gas prices and low wind power output amid rising winter demand.

However, this coal rally has also sparked concern about the security of supply, and for Indonesia specifically, it caused lower than usual inventory levels, which was the reason for the proposed ban, as the government worried about the risk of widespread blackouts even though it already has a mechanism for securing enough coal for local consumption that obliges companies to set aside a portion of their output for that purpose.

China is the largest buyer of Indonesian coal and the world’s largest consumer of the dirtiest fossil fuel.

By Irina Slav for Oilprice.com

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