China Hugely Impacted Due To Coal Supply Ban By Both Australia And Indonesia
Between 2019 and 2021, Australia’s coal export to China fell to zero, according to a report released by the Australia-China Relations Institute of the University of Technology Sydney in December. This had very severe adverse impact on electricity production in China. Due to energy shortage, not only people suffered a lot but even factory production came down tumbling.
Now once again China’s coal supply is seeing a huge impact following the one-month export ban by Indonesia – presently China’s largest import source of thermal coal, experts said. Though Chinese Government is trying to reassure its citizens that the volume of imports is smaller when compared with domestic output. However due to Wuhan Virus and other problems the country’s coal production is not getting stabilized to the desired level.
The Indonesian government on Saturday banned coal exports in January, citing worries that insufficient supply at domestic power plants could result in widespread blackouts in Indonesia itself.
Indonesia has a Domestic Market Obligation policy whereby coal miners must supply 25 percent of their annual production to state utility Perusahaan Listrik Negara at a maximum price of $70 per ton, well below the current global market prices, Reuters reported.
The temporary ban is likely to push up coal prices and send shockwaves through global markets in the short term since the Southeast Asian country is the world’s biggest exporter of coal used in electricity generation. This worrisome aspect has been confirmed by Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.
Earlier when Australia had stopped it’s coal exports, It had badly hurt China. Now when domestic production had started increasing, the Indonesian ban has had an adverse impact. China’s coal supply. had become heavily reliant on imports till some time even when Indonesian import was less than 15% of total requirement. Thus things had gone beyond control in the short term leading to shortage of electricity.
Since the second half of 2021, the Chinese government has taken intensive measures to ramp up coal supply, with production capacity expanded and overall inventories increasing.
Now, fluctuations in coal imports will have a limited impact on domestic coal supply. The China Coal Transportation and Marketing Association has now clarified that the coal supply crisis that emerged in China late last year is now at much reduced scale after the Indonesian ban. China’s coastal provinces where inventories are generally very low were badly affected.
Data from China’s General Administration of Customs showed that China imported 290 million tons of coal from January to November last year, and Indonesia supplied about 61 percent of it.
China has been trying to ramp up coal imports from Russia in recent months, to tide over the crisis.
