Indonesian Coal Price Reference dropped 3.75 % and hitting a 2013 low. The Indonesian government has revised down its owned coal bench mark price by US$ 3.18 / MT to US$ 81.69 in July 2013.
The monthly coal price reference for coal sales in July 2013 lost just 3.75 per cent compared to last month. The Ministry of Energy & Mineral Resources of Indonesia sets the coal's spot price for July 2013 at US$ 81.69 per ton, US$ 3.18 lower than June 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%.
Assessment basis of coal price reference was calculated considering coal with GCV (GAR) 6,322 kcal/kg, Total Moisture (arb) 8.00%, Total Sulphur 0.8% (arb), Ash Content 15 % (arb) and delivery free on Board (FOB) Vessel basis and applicable for spot contract, delivery between 1 – 31 July 2013.
The government of Indonesia has been publishing a monthly coal price reference (HBA & HPB) since January 2009 to be used by coal producers for all spot and term contracts. However, the full implementation of HBA has commenced since September 2011.
The July 2013 HBA is 6.70 per cent or $ 5.87 lower on Year.
February 2011 declared HBA was the highest since the launching of HBA by government of Indonesia (US$ 127.05 / MT) but lowest was declared in May 2009 (US$ 62.83/ MT).
The price was only valid for the spot price (loading on or before 31 July 2013), while as for term price (up to 12 months supplies), the average reference price (HPB) of the previous three months will be used to determine the selling price. (50% of the latest available month HPB,30% of one month prior HPB and 20% of two-month prior HPB).
Government also declared price marker for eight brands of Indonesia's coal, which are most commonly traded in the market. Those eight brands are acted as the benchmark and used to calculate other 63 coal types with a quality similar to the coal price markers.
For sales in the barge, the reference price is reduced by barging and transshipment costs from barge to vessel. Government has recently issued a regulation (644.K/30/DJB/2013 dated 21 March 2013) to regulate or determine coal prices on FOB barge. Government also fixed the freight for barging, surveyor, insurance and etc. to determine FOB barge price. Transshipment cost US$ 4.00/MT + Surveyor cost US$ 0.25/MT + Insurance 0.80% per shipment + Barging cost (for < 270 footer – (US$ 0.0221 X barging distance) + US$ 3.7406, for 270 – 330 footer – (US$ 0.0184 X barging distance) + US$ 3.1172 and > 330 footer – (US$ 0.0154 X barging distance) + US$ 2.6002.
The coal price reference is been established to fulfill the requirement of mining law 04/2009 and ministerial decree No.17/2010. In addition to that, it is aims to increase government revenue from royalties from coal producers.
The current coal market is not showing any upward trend in near future.
Trimegah, an Indonesian based securities company, recently has revised down its 2013 benchmark coal price assumption to USD 80/ton (from USD 95/ton).
According to Trimegah, coal price to increase to US$ 85/ton in 2014, as its expect global demand would slightly improve on expectation of natural gas price increase in the U.S. (from current level of US$ 3.62/mmbtu), resulting in increasing coal demand in the country.
Trimegah Securities also revised its benchmark coal price for 2014 and 2015. Trimegah believes that, the coal price improvement would not be more than US$ 5/ MT per annum at least until 2015 due to low demand.
Trimegah's coal price forecasts
– 2013 US$/ton 80.00 from its previous forecast of US$ 95.00/ton
– 2014 US$/ton 85.00 from its previous forecast of US$ 100.00/ton
– 2015 US$/ton 90.00 from its previous forecast of US$ 105.00/ton
– Sourced
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