Indonesia poised to become major met coke supplier

Indonesia is on the path to become a significant metallurgical coke exporter and coking coal importer, especially from Australia, with around 19mn t of metallurgical coke capacity coming online in the next two years.

At least around 18.8mn t of capacity will be started up in Indonesia between 2022 and 2024, with most of it at the Morowali Industrial Park (IMIP) in central Sulawesi. Chinese coke producer Risun is a leading investor with shareholdings in three of the five coke projects at the park, amounting to a total coke production capacity of 13.4mn t/yr. The company's coke production in China stood at 11.05mn t last year, down marginally from 11.13mn t in 2019.

Indonesia is expected to export around 30-40pc of its metallurgical coke volumes to China, while the remaining will be shipped to other regions depending on market demand. Indonesia exported 235,583t of metallurgical coke in 2021, most of it to Vietnam, India, and China, according to Indonesian customs data. In January-September this year, Indonesian exports fell by 4.6pc from the same period last year to 148,637t. India took over Vietnam as the largest importer of Indonesian coke at 97,208t, followed by Malaysia at 25,017t, Japan at 19,030t and small volumes from China and South Korea. China is currently a key metallurgical coke exporter to India, but volumes have fallen since China implemented the supply side reforms in 2016. China's coke exports stood at 6.4mn t last year, compared with 9.9mn t in 2015.

Coking coal suppliers are eyeing opportunities to increase shipments to southeast Asia because of regional demand growth, with every tonne of metallurgical coke output requiring 1.3-1.4t of metallurgical coal. Indonesia imported 10.1mn t of coking coal in 2021, with Australian shipments accounting for 91.4pc of the imports. Indonesia exported 25.8mn t of coking coal last year, down by 13pc from 29.6mn t in the previous year. Indonesian coal is typically of a weaker grade than premium Australian coals, but is sought after for its low ash and sulphur content.

The Argus fob Australia premium low-vol hard coking coal index rose by 87pc from the start of the year to a historic high of $664/t in mid-March before falling to $184/t in August. The index stood at $294.30/t on 19 October, climbing by $7/t from the previous day on persistent supply concerns.

By Parvin Chong