Fitch: Strong demand for Indonesian coal

Fitch Ratings said in a new report that it expects the outlook for Indonesian coal producers to remain stable to positive in 2008 on the back of strong global coal demand, Indonesia's ability to increase its export volume and the high, but stable price.

The continued hike in oil and gas prices has prompted an increasing number of companies throughout the Asia-Pacific region to rely more on coal as a source of power supply, the agency said. In addition to the regional demand, the Indonesian government plans to build additional coal-fired power plants with a total capacity of 10 gigawatts by 2010 to cope with the current power shortage, Fitch said, as there has not been any major capacity expansion post the financial crisis.

Boosted by the low-interest environment, cement and steel manufacturers, which are traditionally high coal consumers, also are thriving on the booming property sector, the agency added.

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