The Indonesian Ministry of Energy and Mineral Resources has estimated its thermal coal benchmark price (locally known as HBA) to be in the range of USD 59-61 per metric ton (MT) at the year end.
The ministry’s director of mineral and coal revenue Johnson Pakpahan stated late last week that coal price has been under pressure due to oversupply amid the Covid-19 pandemic.
He said that the year-end HBA estimate was made based on coal price projections of a number of global research firms.
“This condition is predicted to improve starting in 2021 with a coal reference price of USD 66/MT to USD 67/MT, while the price of the commodity at the end of this year will move at the level of USD 59 to USD 61/MT. One supporting factor is the increase in electricity demand in line the resumption of economic activity”, Johnson said.
The lack of economic movement makes the coal demand market also fell, especially in India and China.
“Coal stockpiles in India and China are quite high. They are still utilizing their own domestic production”, Head of the Communication Bureau, at the ministry Agung Pribadi said earlier. According to Agung, the reduction in coal supply from Indonesia could not be separated from the impact of the spread of Covid-19 which limited the economic movements of each country. The reason is that there is a tendency for the transition to alternative domestic energy sources.
The HBA has continued to decline since the past three months. The ministry recently unveiled the June HBA at USD 52.98/MT, down from USD 61.11/MT in May. Last year, the HBA averaged at USD 77.89/MT. In the January-April 2020 period, the HBA averaged at USD 66.42/MT.
Despite the pressure on coal price, Johnson was optimistic that the non-tax state revenue from the mining sector this year of USD 2.56 billion (revised downward from initial target of USD 3.16 billion) would be achieved. Coal accounted for about 80 percent of the revenue from the mining sector.
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