JOIN US Indian buyers have reduced shipments from top thermal coal exporter Indonesia and are seeking to renegotiate contracts as a sharply lower rupee has driven up their import costs, Indonesian industry executives said on Tuesday.
The fall in purchases from India is forcing Indonesian suppliers to seek other buyers or dump cargoes into the spot market, putting more pressure on international benchmark prices that are already near their lowest in four years.
India buys about a fifth of Indonesia's exports of coal, which is traded internationally in US dollars. Southeast Asia's biggest economy aims to ship about 317 million tonnes of its expected output of around 400 million tonnes this year, according to government and industry sources.
Several Indonesian companies have scrambled to find new buyers on the spot market after deals with Indian buyers fell through, the Indonesian Coal Mining Association (ICMA) said. "Some buyers have cancelled contracts or sought to renegotiate contracts, because now it's actually cheaper for them than fulfilling their obligations," ICMA commercial committee chairman Pandu Sjahrir said.
"Sellers have been dumping into the market. They have to choose - should I take (buyers) to court or renegotiate with them or just sell it in the spot market?" The ICMA official did not give the volumes impacted by the Indian buyers' moves and those could not be immediately ascertained by Reuters.
Energy imports
The rupee has lost 18 per cent against the dollar since May. Energy imports are among the top contributors to India's growing current account deficit.
India's power producers depend on coal imports to supply more than half of the country's domestic power needs. The slide in Indian imports could help to narrow the gap between Indonesian coal prices and other regional coal indexes which have fallen faster under the weight of a global oversupply situation.