Indonesia: Coal Benchmark Prices hit 3 years low

Indonesian coal reference prices have breached the lowest level of USD 81.6/MT in 2013  as Indonesian government has again revised down its benchmark prices down by USD 4.9/MT to USD 76.7/MT in August. This revised benchmark price is lowest of the 3 year period of Indonesian coal price reference.

The monthly coal price reference for coal sales in August 2013 dropped by 6.1% as compared to last month. The Ministry of Energy & Mineral Resources of Indonesia sets the coal spot price for August 2013  at USD 76.7/MT, USD 4.9 lower than that of July 2013 bench mark Price.

This coal benchmark price was calculated based on calorific value of 6,322 kcal/kg (GAR), stated to be using formula based on the June 2013 index average of ICI-1 (Indonesia Coal Index) 25%, Platts-5900 25%, NEX (Newcastle Export Index) 25%, and GC (globalCoal Index) 25%.

Owing to the global plunged demand,  last week Indonesia's Director General of mineral of coal has again dropped its HBA (Coal benchmark Price) by 6.1% which is at 76.7 points (-4.99 points).

As the Indonesian government dropped the benchmark price the leading coal brand of Indonesia has also dropped its prices by 5-6%. 

Gunung Bayan I (GCV-7000, TM-10%, S-1% and Ash-15%) which was at the USD 87.6/MT FOB in July, decreased by USD 5.4/MT and now offered at USD 82.2/MT FOB. 

Prima coal brand  (GCV-6700, TM-12%, S-0.6% and Ash-5%) has offered materials at USD 82.5/MT FOB for August which is down by USD 5/MT from July month.

Indonesian 5400 GAR Melawan Coal has also dropped by 5.5% and reached at USD 60.79/MT FOB. 

However for the September shipment, traders are offering 3800GAR, material at USD 36/MT FOB, 4000 GAR at USD 39.5 FOB and 4800 GAR at USD 53/MT FOB. 

As the global demand does not show any positive movement so it is expected that the short term market will remain on the low side. From next week, the market may have some demands as the Ramadan festivals will get over. However, the eventual coal demand may not be able to support coal market and would again pull coal prices down.