July 10, 2018 / 10:12 AM / a year ago

Wet weather slows Indonesian coal exports, supports prices

JAKARTA (Reuters) - Wetter than normal weather in recent months has slowed coal shipments from one of the main producing regions in Indonesia, the world’s top thermal coal exporter, according to weather data, brokers and analysts, supporting prices of the fuel.

FILE PHOTO: A tug boat pulls a coal barge along the Mahakam River in Samarinda, East Kalimantan province, Indonesia, March 2, 2016. REUTERS/Beawiharta/File Photo

Thomson Reuters Eikon data shows the cumulative rainfall in the province of South Kalimantan this year was 37 percent higher than average as of July 10, and 27 percent more than average in East Kalimantan.

(GRAPHIC: Wetter than normal weather disrupted coal output in the top exporter - reut.rs/2NI2C3M)

Queues of dry bulk vessels in those two provinces were also higher than average, after rains turned hauling roads into mud, disrupting coal loading, according to Eikon shipping data.

“It’s been fairly slow in the last couple of weeks,” a Singapore-based shipping broker said, referring to Indonesian coal exports, adding there were “literally no cargoes moving out of Indonesia” last week.

“We know that there are pretty decent queues and pretty limited activity out of there,” he said. But conditions had now begun to improve with shipments to south and central China, he said.

Slower Indonesian exports along with robust demand from China, where hot weather has increased power usage, and increased imports by India, South Korea and Japan, thermal coal prices in Asia hit six-year highs last month.

(GRAPHIC: Wetter than normal conditions across Kalimantan have caused congestion off the area's main coal-handling ports - reut.rs/2NBfEQi)

A spokesman for Indonesia’s biggest coal miner Bumi Resources, Dileep Srivastava, said rains were “heavier than usual over May and most of June” and there “could be some vessel slippages.”

The weather in those areas was “still wet but drier conditions (are) now apparent,” he said.

But Bumi, which has mines in South and East Kalimantan was still targeting output of 90 million tonnes for 2018, Srivastava said.

Coal production at Indonesia’s second-biggest producer by volume, Adaro Energy, had been affected by wet weather this year, but these were largely anticipated and were “still manageable”, spokeswoman Febriati Nadira told Reuters.

Adaro was still optimistic of achieving its annual production goal of 54-56 million tonnes, Nadira said.

“The first week in July was really wet,” said Keith Whitchurch, head of mining engineering consultancy SMG in Jakarta, referring to East Kalimantan.

“It’s been a wet year.”

(GRAPHIC: Indonesia coal benchmark prices at six-year highs after wet conditions disrupted supply - reut.rs/2NBhlgG)

Additional reporting by Bernadette Christina Munthe and Wilda Asmarini; Editing by Manolo Serapio Jr.

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