Indonesia 2010 coal output may fall 6 pct on rains

* Prolonged rains to hamper miners, output seen at 300 million ton

* Reduced output may firm regional market seeing weak demand 

Coal output from Indonesia, the world's biggest exporter of thermal coal, may fall by 6 percent this year to 300 million tonnes, if unseasonal rains persist all year, which may tighten an oversupplied regional market.

Traders said the supply constraints from Indonesia could help push benchmark Australian thermal prices up to $90 a tonne, after tepid demand from buyers drove prices on Thursday to a six-month low of $87 a tonne.

"It will be difficult to achieve the initial target if rains continue," Bob Kamandanu, the chairman of the Indonesian Coal Mining Association, told Reuters on Friday, referring to a target of 320 million tonnes.

"Coal mining usually stops when it rains except producers that have good inventory management," Kamandanu said.

Rains already led to one force majeure of coal output at a unit of Indonesian coal miner PT Bayan Resources  in Kalimantan last month, affecting a 115,000 tonne August shipment to trader Vitol.

Indonesia's main coal miners include PT Bumi Resources Tbk, PT Adaro Energy Tbk, and PT Pertambangan Batubara Bukit Asam Tbk.

The coal output production figures from the association include production from illegal mines which produce around 40 million tonnes annually.

The Indonesian Meteorology, Climatology and Geophysics Agency (BMKG) said unseasonally heavy rains will continue across Indonesia for the rest of this year as La Nina weather event unfolds.

Most of Indonesia usually has a dry season in July, August and September, but agency data in July and for the first 10 days of August showed that extreme weather has hit the archipelago, with rainfall intensity above normal except in some parts of eastern province Papua. Source: Reuters