Event: Lianhe Zaobao reported that on January 1, Indonesia banned coal export in January 2022 because of concerns about China's insufficient power supply. The Ministry of energy informed all ports to store all coal for supply to Chinese power plants and independent power producers (IPPs).
Indonesia's export ban is expected to be mainly due to the shortage of coal resources. Since 2021, international energy has been in shortage, and overseas coal prices have remained high. In December, HBA index was 159.79 US dollars / ton. Indonesia introduced a "China market obligation (DMO)" in 2018 According to the policy, coal mining enterprises must supply 25% of their annual output to the Chinese market at a price of up to $70 per ton. This price is far lower than the overall price level in 2021, resulting in high export enthusiasm of Indonesian coal producers and a large outflow of coal. In August 2021, Indonesia also took similar measures to prohibit the export of 34 coal enterprises to ensure China's power coal supply. We speculate that the introduction of Indonesia's export ban is mainly due to the low inventory of Chinese power plants and the expectation that the rainy season will interfere with coal production.
The import ban is expected to be short-term and difficult to last for a long time. According to the data of the Ministry of energy and mineral resources of Indonesia, as of December 10, 2021, the total coal output of Indonesia was 560 million tons, which is expected to reach 609 million tons in 2021, 637-664 million tons in 2022, and 190 million tons in consumption, accounting for about 30% of the total output. Based on its low coal consumption in China, we expect the export ban to be short-term and difficult to last for a long time. In addition, some manufacturers have completed 25% of the tasks, and there is also uncertainty whether these manufacturers will resume exports.
Indonesia is a major exporter of coal in the world, accounting for more than 60% of China's total coal imports. According to wind data, Indonesia's total coal output in 2020 was 563.7 million tons, of which 405 million tons were exported, accounting for 31% of the total international coal export of 1.285 billion tons. Indonesia's coal export to China was 127.8 million tons, accounting for 42% of China's import in 2020. According to the coal resources network, China imported 293 million tons of coal and lignite in November 2021, of which 178 million tons were imported from Indonesia, accounting for 61%, of which 19.5 million tons were imported in a single month in November. It is estimated that the impact of Indonesia's export ban on China in January may be about 20 million tons. Therefore, Indonesia's suspension of coal export means that China's coal import or tightening will also lead to a lack of import resources in Japan, South Korea and other countries and have to turn to other markets. At the same time, Australia's coal import is still limited, and the short-term gap of Indonesian coal is difficult to be filled by other means. In addition, China's supply guarantee task is gradually coming to an end, and China's coal production returns to normal level, The destocking of terminal power plants may accelerate, and China's coal supply is expected to ease, which will promote the stabilization and recovery of China's coal prices.
China's coal prices have basically bottomed out and are ready to rebound. The recent rapid decline in coal prices is mainly due to the panic selling caused by the reduction of purchased coal prices of large groups. Under the influence of Indonesia's export ban, market sentiment will be repaired.
Investment suggestion: Indonesia's export ban is conducive to the improvement of China's supply and demand pattern, thus promoting the stabilization and recovery of China's coal price. It is suggested to pay attention to China Shenhua Energy Company Limited(601088) , China Coal Energy Company Limited(601898) , Jinneng Holding Shanxi Coal Industry Co.Ltd(601001) , Shanxi Lu'An Environmental Energydev.Co.Ltd(601699) , Shanxi Coal International Energy Group Co.Ltd(600546) and Yankuang energy.
Risk tip: the actual implementation of Indonesia's export ban was less than expected, and the coal price fell sharply.
