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Sources say that China has sold coking coal to Indonesia, a rare trade.

Sources say that China has sold coking coal to Indonesia, a rare trade.

Sources familiar with the situation said that China shipped at least three cargoes worth of coking coal in May to processors on Indonesia's Sulawesi, invading a market dominated by Australia and Indonesia.

China, the world's largest importer of coal for steelmaking, isn't a major exporter. It has only exported the fuel to Indonesia three times since 2024 began, according to monthly Chinese customs statistics.

Three sources claim that the state-run Shanxi Coking Coal Group exported coking coal from China to Indonesia in last month. Risun operates one of Indonesia's largest coke-processing facilities in the Sulawesi area.

Sources said that the state-run group had sold another cargo for export to Indonesia to Hong Kong Jinteng Development Ltd. A second source confirmed this and added that a third shipment was also sold to an Indonesian Dexin Steel Plant.

Sources requested anonymity because they weren't authorized to speak about the matter.

Shanxi Coking Coal China Risun, and Dexin Steel have not responded to our requests for comment. Hong Kong Jinteng Development Ltd. could not be reached.

According to an independent consultant, Lawrence Yan, the move was designed to test economic feasibility of Chinese supplies and show that traditional sellers such as Australia had other options.

He added that the high costs and fierce competition from Russia and Mongolia would make it unlikely for this trade to become mainstream.

A Chinese trader Winsway stated last week that the slowdown in China's steel industry may allow for a greater supply of coking. This could make it a more regular export, in the long term.

In April, China exported the first shipment of coking coal since July last year. The data for May has not yet been released.

INDONESIAN Coke Overcapacity

Coke processing facilities in Sulawesi are a major source of metallurgical coal, a raw material for steelmakers. This has boosted demand for the coking coal used to produce coke.

Kpler data shows that Indonesian met coke exports reached a record in 2024. One source said that the region was now suffering from overcapacity with only 60 to 70 percent of its capacity being used.

India, a major buyer of met coke in Indonesia, imposed import restrictions on December.

(source: Reuters)