* Global coal mkt to see oversupply of 16 mln T in 2017
* Indonesia coal industry buoyed by higher prices
* Several suppliers intend to boost output
(Adds comment, detail)
By Fergus Jensen
NUSA DUA, Indonesia, May 16 The risk of
oversupply in the global coal market is growing as suppliers
respond to higher prices, though power demand in countries such
as Indonesia may absorb some extra output, producers and
The global coal market is forecast to see oversupply of 16
million tonnes this year, Noble Resources chief coal analyst
Rodrigo Echeverri said on Monday.
"Those (producers) who are going to expand into the
second-half of this year are going to have to face price
pressure," Echeverri told the Coaltrans Asia conference in Bali.
"The producers are now making money, so it's in the hands of
the producers what they do with that money. To go and invest in
their own production and expand it - that's actually not a very
good idea for the market."
Indonesia's coal industry has benefited from higher prices
this year after a downturn in 2015 and 2016 put many small
producers out of business, though recent price declines could
signal more difficulties ahead.
Several of Indonesia's biggest producers plan to ramp up
output in 2017 including Bumi Resources unit Arutmin,
targetting a 21-percent increase to 35 million tonnes.
Australian coal prices, the benchmark for
Asia, soared 130 percent to over $110 per tonne last year, but
have slumped by 20 percent since early April to just over $70.
Ken Crichton, president-director of mining contractor Theiss
Indonesia, said his company would be careful responding to
client demand for more production.
"We've put most of our idle plant back to work - now we've
got the decision whether we re-invest or not. And after the last
five years it's going to be quite a challenge to convince our
organisation where prices are going to be to justify further
investment and expanding our operations in Indonesia."
However, the chief executive of Indonesian producer PT Adaro
Energy, Garibaldi "Boy" Thohir, told Reuters he was
less concerned over oversupply.
"Domestic demand from Indonesia will increase rapidly and
... it's also not very easy to ramp up production because there
are a lot of challenges," he said, citing problems that hit some
miners such as procuring heavy equipment and gaining financing.
"Yes, short-term there will be a little more supply but in
the medium term I'm still very optimistic."
Thohir said Adaro was not increasing output for the
foreseeable future as it dedicated reserves to feed its own
Indonesia's 2017 coal demand may rise 11.5 percent from a
year ago to 101 million tonnes, said Agung Priabadi, the energy
ministry's director of coal. Power stations would use 86 million
Indonesia, the world's top thermal coal exporter, could
increase production by 5 percent in 2017 and 2018, Indonesian
Coal Mining Association Chairman Pandu Sjahrir said on Sunday.
In October, Sjahrir said Indonesia's coal production could
reach 460 million tonnes in 2017, up from an estimated 440
million tonnes last year, because of improving prices.
(Writing by Ed Davies; Editing by Christian Schmollinger and