China may reduce coal import in H2, Korea to increase demand for RI coal
Tuesday, August 2 2022 - 01:20 PM WIB
Despite the expected increase in power consumption in the second half of this year, China may reduce coal import as it accelerates domestic production and due to the higher coal prices in the global market, commodity research firm PT Indeks Komoditas Indonesia (IKI) said in its latest Indonesia Coal Report (ICR).
The China government predicted power consumption in the second half of 2022 would increase by 7.0 percent y-o-y, or higher than the increase in the first-half of only 4.9 percent, driven by government policy in accelerating the country’s economic growth, higher activities in the infrastructure sector as lockdowns are lifted, and the expected lower temperature in last quarter 2022.
The Chinese government also projected higher power plant capacities in the second semester including coal plants’ capacity.
“The assumptions from the Chinese government indicate higher coal demand in June – December 2022. However, the current high level of coal prices, low steel demand in the third quarter of 2022, and the uncertainty of the global economic condition may cause China to reduce demand for imported goods, especially coal, to reduce its capital outflow, and this may create some pressures to prices in the middle of the Fed’s action to increase further its interest rate,” the ICR said.
While demand from some other Asian countries is also expected to weaken amid rising global economic uncertainty and higher coal prices, Indonesian coal miners may turn to South Korea, which is expected to increase demand for Indonesian coal as the country will stop import from Russia and amid higher price of Australian coal.
“IKI hopes that Korea’s plan to stop import of Russian coal and the high price of Australian coal will make the Koreans increase demand for Indonesian coal in the third quarter of 2022,” the ICR said.
IKI predicted India will reduce demand for imported thermal coal in third quarter 2022 not only because of higher output from renewables but also caused by the high-level of coal and gas prices.
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