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China’s coal futures plummeted on Tuesday before a review of a ban on exports announced last week by Indonesia, one of the world’s largest oil exporters, is feared to be wreaking havoc on the world economy.
The most stable stock traded on the Zhengzhou Commodity Exchange rose to 8 percent on Tuesday compared to its closing price on Friday, several other contracts rose more than 6 percent in the afternoon.
An Indonesian government official said on Monday that the coal country was facing a “critical time”. This follows a statement from the energy ministry over the weekend that the government wants to ban the export of coal in January.
The Energy Ministry said the ban could help prevent power outages run by PLN. The ban has sparked fears of an increase in commodity prices in the wake of a global financial crisis.
Also being a big foreign China coal source, Indonesia is also the most important country in India and Southeast Asia. The country reported more than 21m tons of coal over China in September, from 17m in August.
“This move could be a problem for China and India, which is the main source of Indonesian coal,” said Warren Patterson, chief marketing officer at ING.
Coal prices in China have deteriorated sharply during the outbreak, with futures rising to Rmb2,301 ($ 362) in October as the country’s economic downturn intensified as the closure of the Delta coronavirus crisis closed. This compared to about Rmb700 on most contractors sold in Zhengzhou on Tuesday.
Coal prices in China plummeted after Beijing set up an integrated strategy to advise miners to increase production.
In a statement Monday, PLN said it received an additional 3.2m tons of coal for its plant in January with government support. But it said it needed an additional 5.1m ton to prevent the spread of the country.
It warned that ensuring that access is “in the best interests of the country” and should be “prioritized” before reviewing the cabinet’s ban on Wednesday.
President Joko Widodo said the provision of PLN was “appropriate” and called on coal producers to meet domestic needs before exporting.
Researchers at Morgan Stanley predict that coal losses in Indonesia, which account for about 40 percent of the seaborne market, could lead to a sharp rise in coal prices in October.
At the time, the price of Australia’s strongest coal, a symbol of the Asian market, rose to more than $ 270 per tonne. It is currently on sale for about $ 150 tonne.
“That being said, the export ban could be rescheduled / rehabilitated, with a meeting between the government and miners scheduled for January 5,” said investigator Morgan Stanley.
Shares at Whitehaven Coal, one of Australia’s largest independent coal retailers, rose 5.8 percent to A $ 2.76 on Tuesday over a strike in Indonesia. London-based Glencore, which also operates coal mines in Australia, made 3.3 percent of sales in the morning.
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