Fitch: Indonesian coal sector stable

Fitch Ratings said in a special report that the credit outlook for the Indonesian coal sector will remain stable during 2009, as demand for Indonesian coal should remain in place driven by its continued usage for power generation.

Although no substantial increase in demand for thermal coal is anticipated given the global recession, the coal market is expected to remain fairly tight this year as the infrastructure bottleneck in Australian and South African ports persist, Fitch said.

The global economic slowdown coupled with the massive correction of crude oil prices, from a record high of $147 per barrel to less than $50 per barrel, has resulted in the benchmark Newcastle Freight on Board coal price falling to less than $80 per ton from a peak of $192.5 per ton in July 2008, the agency said.

While prices may fall further, it is expected to remain above its historical average in the medium-term, Fitch said.

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