NUSA DUA, Indonesia, June 10 (Reuters) – The coal industry always seems to be looking for a white knight to rescue it from some crisis, and it is perhaps ironic that Indonesia, the world’s largest exporter, is the next great hope that is to save global miners from the current supply glut.
The theory is that as Indonesia ramps up domestic coal-fired power generation, it will rotate its exports to meet local demand, thereby removing millions of tonnes from the seaborne market and bringing it back into balance.
This sounds fantastic to coal producers, particularly those in Australia, South Africa and Russia, who are looking to boost exports into Asian markets.
But white knights have had a somewhat chequered recent history for coal producers and traders. China was once supposed to be the huge market that would suck up every tonne of coal that could be mined, and for a brief few years it looked like it might just work.
Chinese imports rose steadily from 2009 onwards, and by 2011, some forecasters were saying the world’s biggest producer and consumer of coal would import a billion tonnes a year.
This heroic figure looks laughable now, given that Chinese imports are down almost 40 percent in the first five months of the year, a trend that most analysts expect to continue as Beijing works to restrict pollution and rotate the economy away from heavy industry.
“Peak coal” in China was a fairly common term being bandied around at Coaltrans Asia, the industry’s largest annual gathering, held this week on the Indonesian island of Bali.
INDIA IMPORT GROWTH NOT ASSURED
The next big hope for coal was India, based on the view that its demand was rising strongly and state-owned mining giant Coal India would be unable to boost output as much as hoped.
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