Indonesia’s benchmark reference price also known as Harga Batubara Acuan, or HBA for December is at $59.7/t, up by 7.1% from November, according to a ministry official. Whereas, in Dec ’19 the same stood at $66.3/t.
The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).
It is the basis for determining the prices of 77 Indonesian coal products and calculating the amount of royalty producers have to pay for each metric tonne of coal sold. It is based on 6,322 kcal/kg GAR coal with 8% total moisture content, 15% ash as received and 0.8% sulfur as received.
The country’s benchmark price had been falling since Apr ’20 after the pandemic led to lockdown in most countries and a subsequent drop in energy demand. After falling for six months, the HBA picked up for the first time in Oct ’20.
The demand for Indonesian coal from China (key importer of Indonesian coal) has lent support to the Indonesian HBA price, after the release of import quotas for coal towards year-end. Also, the improvement in industrial activities in other key importing countries like Japan, South Korea, and India has also bolstered Indonesian coal demand and HBA price.
Indonesia’s coal production falls in Nov ’20
Kalimantan recorded a drop in coal production for Nov ’20 at 35.6 mn t, down by 21% m-o-m amid rainy weather and slow production, according to data from Indonesia’s Ministry of Mineral and Energy Resources. While the export volume also dipped in November to 11.7 mn t, down by 45% m-o-m from 21.3 mn t in Oct ’20, the same data showed.
Outlook
China is currently facing shortage of domestic coal supplies because of a severe winter. The domestic coal of 5,500 kcal/kg NAR grade is currently trading at RMB 660/t FOB ($100.64/t) and that too the quantities are scarce due to coal supply shortage in China. Whereas, Indonesia’s 5500 kcal/kg GAR grade coal prices are at around $61-62/t, CNF Qingdao, China basis.
Subsequently, Indonesia’s HBA price is expected to move up in the upcoming months as China would release new import quotas starting 2021.
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