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Indonesian coal may find homes in Europe amid volatile prices — ICMA

A disrupted global market may lead to Indonesian coal finding new homes in Europe as the ongoing Russia-Ukraine conflict continues to create turmoil in trade flows and is expected keep global prices of the fossil fuel volatile over the next six-seven months, Indonesian Coal Mining Association Director Pandu Sjahrir told S&P Global Commodity Insights.

“I think the [Russia-Ukraine] war also adds a lot of uncertainty though I can give you a macro view; there is going to be uncertainty in the next 6-7 months,” he said, adding that there would be further disruptions in shipments and global supplies. “With respect to the prices, there is going to be increased volatility.”

Stating that sanctions on Russian coal are impacting supply to Europe, Sjahrir said Indonesian miners were looking to supply coal to European buyers, adding some miners have already explored markets like Spain, Poland and Italy.

Despite the surge in thermal coal prices globally, increasing production to meet high demand in a tightly supplied market has proven to be a problem in Indonesia, Sjahrir said.

Indonesia has set a target of 663 million mt coal production in 2022, higher than previous years, on expectations of more demand. While the production levels are comfortable to achieve, there are issues like supply chain disruption and inflationary pressure on costs that might impact prices, he said.