Bloomberg Indonesia May Cut Coal Output Growth Forecast as

April 20 (Bloomberg) -- Indonesia, the world’s biggest exporter of power-station coal, may produce less of the fuel than estimated after prices dropped and demand from overseas buyers fell.

The Indonesian Coal Mining Association may cut output growth forecast to 5 percent this year from as much as 8 percent, Bob Kamandanu, chairman of the producer group, said in an interview in Jakarta today.

The global recession has reduced electricity consumption, prompting power generators to lower purchases of coal. China, the world’s second-biggest energy user, will continue to have a surplus of coal in the short term as a slowing economy curbs demand, Wang Xianzheng, head of the China National Coal Association, said today.

“In the first two months we saw domestic buyers boosting purchases because of low stockpile s in the fourth quarter while exports fell a little,” Kamandanu said. “We don’t know whether this will continue or we’ll see an easing” in domestic
purchases.

Indonesian companies mined about 239 million metric tons of coal last year, he said.

Energy and Mineral Resources Ministry said coal output from major producers may reach 230 million tons this year and increase to 250 million tons next year. The coal association’s former chairman, Jeffrey Mulyono, said on March 4 that output
may range between 250 million and 260 million tons this year.

Coal Prices
Indonesian companies produced 38.23 million tons of coal and exported 28.35 million tons in the first two months of the year, compared with last year’s 37.6 million tons of output and 32.2 million tons in exports, Kamandanu said.

Kamandanu, who is also head of coal miner PT Berau Coal, said the international coal price index may average $60 to $75 a ton this year.

Weekly price index for coal from Australia’s Newcastle, the world’s biggest port for the fuel, surged to a record $192.50 a ton in July, before closing 2008 at $79.50 a ton, according to McCloskey Group Ltd. The index averaged $129 a ton in 2008.

“The surge last year was like a bubble waiting to burst,” Kamandanu said. “China still has lots of supplies, while the Australian dollar’s weakness will benefit Australian producers,” he said, adding that demand may pick up later this year.

Coal from Newcastle rose 1.3 percent to $61.80 a ton in the week to April 10, according to data from McCloskey.

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