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Indonesia's commodity export plan rattles coal market
Indonesia's commodity export plan rattles coal market
Singapore, 21 May (Argus) — Indonesian coal suppliers and buyers are assessing the commercial implications of Jakarta's decision to channel exports of key commodities such as coal and palm oil through state-owned enterprises (SOEs), otherwise known as BUMN, which has created uncertainty around existing supply contracts and raised questions over the role of traders. The 20 May announcement is the latest in a series of policy changes that aim to give Jakarta tighter controls over the country's coal mining industry and bolster prices. These policy shifts follow a protracted downturn in prices that began in 2022, although prices have since recovered. Argus last assessed Indonesian GAR 4,200 kcal/kg coal at $63.77/t fob Kalimantan for coal loading on Supramax vessels, the highest since May 2023. The price increase has largely been driven by supply concerns after producers faced delays in receiving their 2026 work plans and budgets (RKAB), or output quotas. Other recent measures announced by the government that aim to tighten controls include plans to slash coal output this year, revising the validity period for RKABs back to one year from three previously, withholding coal export sales proceeds in onshore bank accounts and tweaking the domestic HBA coal reference price. Jakarta also previously announced plans to introduce a coal export tax, although this has been delayed. Indonesia is the world's largest exporter of thermal coal and shipped about 524mn t — more than half of total global seaborne supply — in 2025, although this was down by 6pc on the year. Last year's decline in exports was the first since 2020 when the Covid-19 pandemic weighed heavily on industry, denting global demand and at the same time affecting supply chain logistics. Phased rollout planned The latest policy will be rolled out in phases from June through August. Exporters will gradually shift contracts, transactions and payment flows to the BUMN, before the entity moves to full end-to-end control of transactions from September. It is unclear if there will be one enterprise or multiple entities, although a market participant said the BUMN could be linked to Danantara Indonesia. The BUMN will initially cover coal, palm oil and ferroalloys — commodities that accounted for around 23pc of Indonesia's total exports in 2025 — with the scope subject to quarterly review and possible expansion, according to research from Singapore's OCBC bank. The entity could essentially work as a marketing agent and export coal procured from domestic producers, traders said. President Prabowo Subianto cited an estimated $908bn in lost revenue over the past 34 years due to under-invoicing, transfer pricing and weak oversight of commodity export proceeds, arguing that tighter governance is needed to capture the full value of strategic commodities. The move comes at a time when the Indonesian currency has been among Asia's worst-performing in recent months, reflecting pressure from capital outflows and global dollar strength. The benchmark Jakarta Composite Index, representing 913 companies spanning sectors including commodities and energy, is down 30pc from the start of the year. Market participants said the absence of detailed transition guidance is already disrupting trade flows. A Singapore-based coal trader said there is no clarity on how existing contracts with shipments due this year will be handled, and all market participants are awaiting more operational details, which typically takes time to emerge in the commodity markets. Utilities in parts of southeast Asia as well as in India are concerned about term supplies and are seeking inputs from Indonesian suppliers on contracted deliveries. Reaction from China, the biggest buyer of Indonesian coal, has so far been cautious, with some market participants arguing that it will be difficult to implement such a policy in practice. An Indonesian coal producer acknowledged that it has received a number of calls from customers, seeking clarity on whether it will be able to fulfil contracts, but added that there are no clear answers as of now. Term supply contracts in focus The Indonesian Coal Mining Association (APBI) warned that a lack of technical clarity on how current sales will migrate to a BUMN-led structure could jeopardise long-term supply agreements, particularly multi-year offtake contracts. The industry is seeking confirmation on whether existing contracts will be honoured or will have to be renegotiated. In the spot market, at least one low-calorific value (CV) coal supplier has raised offers for July-loading Panamax cargoes of GAR 4,200 kcal/kg coal by as much as 10pc. Broader spot offers may be withheld pending policy clarity, traders said. While some market participants expect existing contracts to be honoured at least through this year, uncertainty remains elevated. Participants also raised broader structural concerns about the BUMN model. Coal transactions involve multiple technical and commercial variables — including CV, ash, moisture and sulphur content, vessel scheduling, blending requirements and payment terms — requiring significant operational expertise. The questions in the market range from operational issues involving mine planning to barge loading and transshipment to the risk of disputes, a trader said. There is also uncertainty surrounding long term off-take agreements between trading companies and producers, some of which involve pre-payments and funding arrangements. Traders with existing positions may face pressure to declare force majeure if the policy disrupts their ability to meet contractual obligations, a market participant said. The framework also adds another regulatory layer to an already complex environment that includes domestic market obligation (DMO) rules, export licensing, royalty adjustments, RKAB approvals, downstreaming requirements and directives to park sales proceeds in Indonesian banks for at least one year. An indirect policy impact could be on jobs that may be lost in the industry along with the potential removal of competition in the sector. There are also questions around the survival and existence of some trading and service companies, an official with a large southeast Asian utility said. Authorities will need to ensure private-sector incentives remain intact, OCBC said, warning that concerns about crowding out could deter investments in the coal sector, unless mitigated through policy clarity and ongoing engagement. Non-tax revenues are closely tied to commodity prices and there could be market volatility because of the plan, OCBC added. By Saurabh Chaturvedi and Andrew Jones Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Japan decides not to issue summer power saving request
Japan decides not to issue summer power saving request
Osaka, 21 May (Argus) — The Japanese government has decided not to request electricity conservation this summer, because the country has secured sufficient supply capacity and fuels to meet expected peak demand despite a hotter-than-normal weather forecast. All of Japan's 10 service areas are projected to maintain reserve margins of more than 3pc in July-September, above the minimum 3pc level needed to cope with emergencies such as spikes in demand and unexpected power plant outages, even if the country experiences its hottest summer in the past decade, Meti said on 20 May. The capital Tokyo region, Japan's biggest power consuming area, is now expected to post reserve margins of 3.5pc in the first half of August and 3.7pc in the second half. The ratio rose from the previous estimate of 2.4pc made in March for the entire month, given the capacity addition through the public tender. Tepco Power Grid secured 976MW, including 18MW of demand response, at an average contract price of ¥299/kW ($1.88/kW) through an open call for 1.2GW held in April, with the capacity required to be available over 1 July-18 September. Jera, the country's largest power producer, won the tender with its 1GW Sodegaura No.2 gas-fired unit, which has been mothballed since 1 April. Power demand in Japan is expected to remain firm this summer. Northern areas face a 60pc chance of above-normal temperatures in June-August and other regions a 70pc chance, according to a Japan Meteorological Agency forecast released on 19 May. Along with output capacity, power producers have so far secured sufficient fuel for generation, despite concerns over disruptions to crude and LNG shipments through the strait of Hormuz due to the US-Israel war with Iran. Japan's main power utilities held 2.04mn t of LNG as of 17 May, broadly in line with the average level for the past five years, Meti said. Thermal coal inventories also remained stable as of mid-May, while power producers generally maintain stocks equivalent to about one month's consumption, or around 7mn-9mn t, according to Meti's hearings with companies. Power producers also operate oil-fired plants during peak summer and winter demand periods. They held more than 500,000 kilolitres (3.15mn bl) in inventory as of the end of January, well above monthly consumption levels, while company hearings confirmed that stock levels remained stable as of mid-May, Meti said. By Motoko Hasegawa Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Germany notifies EU of more ETS allowance cancellations
Germany notifies EU of more ETS allowance cancellations
Berlin, 20 May (Argus) — Germany's government on 20 May agreed on a final notification to the EU on the emissions trading system (ETS) allowances for 2024 the country will cancel for the coal-fired power plants closed under its phase-out policy. The exact number of allowances to be cancelled will depend on the total final volume of permits absorbed by the ETS' market stability reserve (MSR), which will be determined next month, Germany's environment ministry said. The number of allowances cancelled could amount to zero if the MSR has fully absorbed the relevant quantity, or to 687,000 if the MSR results in only a partial cancellation, the ministry said. The measure affects allowances from Germany's EU ETS auction volumes, taking into account the emissions saved in 2024 by the decommissioning of the 294MW Neurath A and 202MW Frechen lignite-fired units in 2022. The calculations to determine the volume of allowances to be cancelled were based on annual reports modelling the actual emission reductions resulting from the plants' closure, the ministry said. The calculations also take into account the MSR, which absorbs 24pc of excess supply from the market annually. The German government cancelled 514,000 allowances for the year 2023 in 2025, also relating to the decommissioning of Neurath A and Frechen. It also notified the EU of its intention to cancel allowances pertaining to 14 coal or lignite-fired plants that went off line in 2024. These allowances are scheduled to be cancelled next year, the ministry said on Wednesday. The cancellation is designed to prevent the so-called "waterbed effect" of released allowances being used elsewhere, the ministry said, thereby safeguarding the climate impact of the coal phase-out. By Chloe Jardine Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
Cop 31 president calls for faster electrification
Cop 31 president calls for faster electrification
London, 20 May (Argus) — The global pace of electrification should urgently increase, to fight climate change, president-designate of the forthcoming UN Cop 31 climate summit Murat Kurum said today at the Copenhagen climate ministerial in Denmark. Kurum pointed to "electrification as a critical frontier of the transition", and called for more of the share of final energy consumption to be met by electricity. It stands at around 20pc, but increases to more than 27pc by 2030 in the net zero emissions scenario from energy watchdog the IEA. "To achieve this mission, decarbonising power generation is essential. However, it is not enough", said Kurum, who is also Turkey's climate minister. Several countries have made their biggest emissions reductions by decarbonising power — usually by closing coal-fired power plants and building up renewable energy capacity. It is typically a more achievable goal than the more fragmented task of decarbonising transport or domestic heating. Turkey is hosting this year's Cop summit in Antalya, on 9-20 November, while Australia will lead negotiations. Kurum in April presented Turkey's action agenda for Cop 31, which focused on electrification, ramping up renewable energy and energy efficiency, climate finance, methane emissions reduction and clean cooking. But phasing out fossil fuels — the combustion of which is responsible for the majority of CO2 emissions — did not make the priority list. The Copenhagen climate ministerial is hosted by the Danish government, along with Cop 30 president Andre Correa do Lago and Kurum. It is a private meeting, which allows the Cop presidency and country representatives to discuss priority topics for Cop, and the halfway point talks in June, hosted in Bonn, Germany, by UN climate body the UNFCCC. The ministerial "is an opportunity for ministers to come together and discuss, debate, and forge a clearer collective vision for the road to Cop 31", said associate director of climate diplomacy and geopolitics at think-tank E3G Kaysie Brown. By Georgia Gratton Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.
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