Indonesia reduces thermal coal reference prices for 2nd half of Mar’25

• High-CV coal prices trimmed by 8.2%
• Mid-, low-CV tags reduced by 1.3-2.5%

Mysteel Global: Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has reduced its thermal coal reference prices (Harga Batubara Acuan, or HBA) for all benchmark grades for the second half of March, according to the ministry’s latest release.

The ESDM now publishes the HBA prices twice a month (on the 1st and 15th day of each month), replacing its previous monthly updates in a bid to better reflect market dynamics.

Specifically, the HBA for 6,322 kcal/kg GAR coal (TM 12.26%, sulphur 0.66%, ash 7.94%) – a grade with high CV – was set at $117.76/tonne (t) for the latter half of this month, down by 8.2% from the first-half March HBA price, the release showed. This reduction snapped a four-month uptrend since last November, when the index was set at $114.43/t.

The HBA-I price, gauging mid-CV 5,300 Kcal/kg GAR coal (TM 21.32%, sulphur 0.75%, ash 6.04%), fell by 2.4% from the first half of March to $80.7/t in the second half, the ESDM data showed.

Meanwhile, the country set low-CV HBA-II and HBA-III prices, gauging 4,100 kcal/kg GAR (TM 35.73%, sulphur 0.23%, ash 3.9%) and 3,400 kcal/kg GAR (TM 44.3%, sulphur 0.24%, ash 3.88%), at $49.44/t and $33.71/t, respectively, down by 2.5% and 1.3% compared to their previous levels. Notably, the former index hit a record low since its first issuance in March 2023, and the latter also touched its lowest level since December 2023.

For the HBA and derivatives announced on the 15th of the month, 30% of the value is based on trading prices collected between the fourth week of the previous two months and the first week of the previous month, while the remaining 70% draws from data spanning the second week to the third week of the previous month, according to the ESDM’s new calculating method.

The ESDM mandates Indonesian coal exporters to use the HBA and derivatives to price transactions. Currently, exporters generally use the Indonesia Coal Index (ICI) – collectively produced by Indonesian NGO PT Coalindo Energy and industry agency Argus, and updated on Fridays – for transactions, Mysteel Global learnt.

In practice, export cargoes are settled by using another index called Harga Patokan Batubara (HPB) as the floor price, whereas HBA is a key parameter. For example, for cargoes with a CV between 4,100 kcal/kg and 5,300 kcal/kg GAR, the floor price is calculated based on the following formula:

HPB = (HBA-II*K/4100*(100-TM)/(100-35.73)-((TS-0.23)*4+(ASH-3.90)*0.4)), where K refers to the coal’s CV, TM refers to total moisture, TS total sulphur, and ASH ash content.

“The declines in the HBA and its derivatives have been significantly driven by the ongoing downturn in the global market,” said ESDM through its Instagram account on 16 March.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.