According to the Indonesian Coal Mining Association, Indonesian thermal coal miners will not be able to increase their production in 2016 due to debt and logistical constraints and will not benefit from rising global prices.
Indeed, Asian benchmark thermal coal prices have soared by nearly 30% since May 2016 to nearly US$65/tonne, due to an unexpected increase in Chinese demand (Chinese coal and lignite imports rose by around 7% over the January-July 2016 period compared to the same period of 2015) and to rising consumption in South Korea and emerging Asian markets.
Logistical constraints are likely to limit Indonesia's coal production, and local producers will seek to maintain coal production at its current level.
In May 2016, the Indonesian Coal Mining Association forecasted a 9% decline in coal production in Indonesia in 2016, in a context of slowing Chinese demand contributing to the global oversupply and to falling international prices. Coal exports should also contract by as much as 17% in 2016. Coal production should increase in 2017 if the price gains prove sustainable.