Indonesia Sets New Record in Thermal Coal Exports

In 2023, Indonesia's thermal coal exports have reached an unprecedented level of over 413 million metric tons in the first ten months, affirming its position as the world's largest exporter of this high-emission power fuel.

Indonesian shipments have witnessed an increase compared to the same period in 2022, a growth rate roughly double that of total global coal exports. These exports are predicted to reach new heights in 2023, notwithstanding endeavors to transition several major energy systems away from fossil fuels.

Australia, the second-largest exporter of coal, saw its share decrease to 19.4% in the first ten months of 2023, down from 20% in the previous year. Russia, the third-largest exporter, also experienced a decline in its share from 12.3% in 2022 to 11% in 2023. South Africa and Colombia, the fourth and fifth largest exporters respectively, lost market share to Indonesia in 2023, while the United States, the sixth-largest exporter, slightly increased its global share.

China, along with Hong Kong, was the primary destination for Indonesian coal, importing approximately 183 million tons through October 2023, accounting for around 44% of Indonesia's total exports. This figure represents a 33% increase from the same period in 2022, reflecting the resurgence in Chinese industrial activity in 2023, compared to the COVID-affected demand levels of the previous year.

India was the second-largest buyer of Indonesian coal, accounting for about 20% of the total exports (82 million tons). The Philippines was the third-largest market, taking a 7.2% share (30 million tons). Countries, such as China, are expected to increase their coal imports during the last months of the year as utilities prepare for the seasonal rise in power demand for heating.

Indonesia's growth in market share can be attributed to the relatively low price of its coal compared to higher grades offered by competitors such as Australia. Export prices from Colombia, South Africa, Mozambique, and Russia have been roughly midway between Indonesian and Australian prices. This shows that Indonesia has a consistent price advantage over its peers due to the lower quality of its coal compared to other grades.

In addition to its price advantage, Indonesia also benefits from lower freight costs to major coal consumers such as China and India, making it a preferred supplier for cost-conscious importers throughout Asia.

A recent drop in Australian coal prices to their lowest since mid-2021 could also stimulate increased interest in higher quality Australian grades by utilities seeking to optimize power output while minimizing emissions.

However, for power producers whose primary concern is generating as much power as possible at the lowest possible price, Indonesian coal remains the preferred choice. Accordingly, it is anticipated that Indonesia's total coal exports for the full year of 2023 will shatter previous records.