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Indonesian coal production grows in H1 2014

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World Coal,

Indonesia’s coal production for the first half of this year have increased by 7.6% on the same period in 2013, according to a report from Reuters. Quoting a government official, the news agency put the country’s coal output at 213 million t for the six months to June, while exports grew to 158 million t, 6.8% up on last year.

The rise in coal output highlights the contradicting aims of the Indonesian government and the country’s coal producers. Jakarta has consistently forecast flat or declining production as it says it plans to limit output and tighten controls on exports. In stark contrast, Indonesia’s six major coal producers are all targeting an average production increase of 11.7% this year in response to low prices and contractual requirements.

Unless the government is able to curb the country’s coal production, production is therefore likely to continue to rise, exacerbating the global glut in coal supply and further weakening prices. Bank of America Merrill Lynch recently revised its outlook on coal prices down from US$ 74/ per tonne to US$ 71 per tonne on the back of what is called a “plague of oversupply”.

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