Indonesia

News Research

Mita Valina Liem

(62) 2125548829 mita.valina.liem@clsa.com 18 March 2011

Coal shipment to Japan

We spoke with some coal traders on what is happening in the coal

market after the Japan Event

Two Japanese power companies have declared force majeure, affecting

3.3mt/month in Indoensian exports

BAYAN is one of the exporters to the affected power companies PTBA has also had some orders deferred.

Headline
Japans power grid: It consists of two grids, the East (50Hz) and the West (60Hz). They are connected but can only transmit 1GW of power due to different frequency. Tokyo Electric Power and Tohoku Electric Power (both are from East Grid) have declared force majeure recently, causing delays in some coal shipments. Tokyo Electric Power consumed 3.2m tons in 2010 (1,006MW).Tohoku consumed 7.5m tons of thermal coal a year in 2010 (2 power plants with 3.2GW). Most of coal imports are from Australia and only ~3.3m tons of coal per month comes from Indonesia. We talked to three coal traders, PTBA and Bayan to know more about coal shipments. The key points are: Bayan (BYAN IJ) and Marunda Graha Mineral (not listed, coal comes from Central Kalimantan mines) are among Tohokus suppliers who get affected. Bayan, however, did not elaborate what happened to their coal shipments. We assumed some of the shipments are delayed for several months until the ports are fixed. One of PTBAs Japanese buyers (who only buys from PTBA and is not a power generator) pushed back their coal shipment from April to May. The other seven buyers still stick to their previous orders. PTBA exports 1.4m tons of coal/ year or about 10% of their annual production. PTBA aims to produce 15m tons of coal 2011 or up by 20% YoY. Japanese buyers usually pay premium to PTBA. Mr. Sukrisno said they may lock the prices above US$130/ton at the end of March. Another producer (small player) whose mine in East Kalimantan was not as lucky as PTBA. Their shipment to a Japanese trader was postponed until indefinite time. Their strategy is to divert their coal to China. However, Chinese buyers are more picky, they will look for cheaper coal. Conclusion: Given the fact that most coal import is coming from Australia, we expect limited impact to Indonesias coal producers. Nevertheless, delays in some shipments mean that coal export from Indonesia will be lower in the next few months but demand may go up after they fix the damaged infrastructure. Japan may maximise their coal-fired power plants in the coming months which translates to higher coal consumption. What happened to Tepcos nuclear power plant has caused the country to be more cautious with nuke plants and may look for other sources of energy such as gas, coal or renewables. Positive for coal producers from Indonesia and Australia.

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Indonesia

News Research

18 March 2011

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