On Saturday, Indonesia announced a ban on thermal coal exports to alleviate shortages amongst domestic utilities. The length of the ban is not yet known, with one industry source stating that Indonesia’s monthly coal output of ~40 MMT would correspond to 1/3 of the country’s annual domestic demand, while others have pointed to a potential reversion of the decision in early January. The ban follows as Indonesian authorities have called for producers to meet their domestic market obligations after heavy rain adversely impacted production and coal stocks. According to Ridwan Jamaludin, Director General of minerals and coal at Indonesia’s Energy Ministry, 20 power plants would have to shut if the export ban was not put in place.

In 2020, Indonesia’s thermal coal exports were reported slightly above 400 MMT, which compares with total global seaborne export volumes of 915 MMT (44% Indonesian share) and the total coal trade of roughly 1,165 MMT (35%). However, for the total coal trade, Indonesia was in 2020 reported to have accounted for 25% of total tonne-mile demand, underlining the relative importance of other exporters for shipping demand. Looking across dry bulk commodities, Indonesia’s contribution to overall dry bulk demand was in 2020 estimated at roughly 4%. In sum, we do not expect these volumes to be meaningfully replaced by other exporters given the size of Indonesia’s export volumes coupled with the expectation of a relatively short-lived ban and would thus view the development as a slight negative.