JAKARTA, Sept 4 (Reuters) - A new plan by China to put curbs on shipments of low-quality coal is unlikely to happen quickly, an industry group in top thermal coal exporter Indonesia said on Thursday, with any impact likely to be offset by an uptick in Indian demand.
China, the world’s top coal importer, is currently mulling an industry proposal to halt imports of low-quality coal with ash and sulphur content exceeding 15 percent and 0.6 percent, respectively.
Industry executives and traders said the plan will hit Australia hardest among major coal exporters, while Indonesia, which largely ships fuel with low heating value, won’t be affected much.
Bob Kamandanu, chairman of the Indonesian Coal Mining Association, told Reuters Indonesia’s coal exports to China are mostly low-quality and exceed the 15 percent ash content level.
Kamandanu was unable to give an estimate on how much the Chinese plan might impact Indonesian coal exports or output but questioned how quickly the rules would be implemented.
“It all depends when it will be applied. I have big doubts. The Chinese massively need this kind of coal,” he said.
Australia’s coal exports overall are well within China’s proposed tolerances, the Minerals Council of Australia said, as the average thermal coal ash content is between 10 and 12 percent and average sulphur content is between 0.2 and 0.5 percent.
The Indonesian association’s chairman said if coal exports to China are hampered, its neighbour could step in.
“There is an alternative - India will be needing a lot of coal and predominantly, they are low quality.”
In India, which is also a major buyer of Indonesian coal, many of the country’s thermal power stations have less than a week’s supply of coal on hand, according to data.
Indonesian coal exports are seen at around 350 million tonnes this year and in 2015, according to the association, with Chinese demand accounting for about 50 percent of the total.
Kamandanu said he sees a greater impact to Indonesian production and exports from new export and royalty rules being introduced by the Indonesia government.
But he said if global coal prices remained low then exports and production must be curbed.
The price of Asian benchmark Newcastle coal has dropped nearly 20 percent this year to five-year lows, hitting $69.69 a tonne in the week to Aug. 29, due to heavy oversupply from new mines built when Chinese demand growth began soaring.
Major coal producers who may be impacted by any changes to Chinese import regulations include PT Bumi Resources Tbk , Kideco and PT Berau Coal Energy Tbk, said Kamandanu.
Bumi officials were unable to give immediate comment on Thursday, while Berau and Kideco could not be immediately reached. (Additional reporting by Sonali Paul in MELBOURNE and Fransiska Nangoy in JAKARTA; Editing by Muralikumar Anantharaman)