Jakarta, CNBC Indonesia – Currently, the conflict between Russia and Ukraine has encouraged positive sentiment towards the strengthening of coal commodity prices. This is because the countries of Europe and East Asia are concerned about the sustainability of their energy, most of which are highly dependent on Russian gas supplies.
According to Refinitiv data, on Wednesday (3/2/2022), the price of coal on the ICE Newcastle (Australia) market closed up 46.01% to US$ 446/ton. This is the highest on record since at least 2008.
Executive Director of the Indonesian Coal Mining Association (APBI), Hendra Sinadia, said the concerns of the East Asian market also pushed the sentiment of the Russian coal export market to rise.
“This is unexpected. And even oil prices have an extraordinary record. So we don’t know the extent of the escalation, but we hope this will pass quickly,” said Hendra in Closing Bell, CNBC Indonesia, Tuesday (01/03/2022).
In addition, Hendra revealed that several countries in western Europe have also started to panic to find alternative sources of energy. Italy or Germany, for example, they have started to revive their coal-fired power plant which has been retired for a long time. This is what makes an indication that the demand for coal in western Europe and eastern Europe will increase.
Regarding the price level, Hendra admitted that he could not predict this. So far, he said, this has not been a barrier to Russian exports to East Asian countries.
“That is also what the demands of several European countries will also provide opportunities for other countries including Indonesia to be able to fill several European markets that are looking for alternative supplies,” he explained.
It is known that Russia has become the largest coal market for Europe, because it is geographically closer. Russia’s exports to European Union countries also reached nearly 70 million tons.
“This is possible if people see an opportunity, but from a geographical point of view, it is rather difficult for us to be competitive with several countries, especially Colombia because it passes through the Atlantic and South African routes,” he said.
“Of course there is an opportunity, we have also received requests from several representatives of state buyers who are exploring us, only their coal specifications are high in calories, then Fried’s Competitiveness is also an obstacle,” he added.
In terms of Indonesia itself, Hendra said that so far it is not so affected by the current developing situation, because 98% of Indonesia’s exports to Asia Pacific countries.
“But if there are disturbances from coal production barriers in Russia, this will create more real opportunities for Indonesia because of course the East Asian market is a market that is indeed our traditional market, China, Taiwan, Korea and Japan,” concluded Hendra.
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