- Indonesia reduces high-CV coal price by 2.5%
- China resists HBA tags amid softening demand
Mysteel Global: Indonesia’s Ministry of Energy and Mineral Resources (ESDM) on Tuesday issued its thermal coal reference prices (Harga Batubara Acuan, or HBA) to guide transactions for the second half of April, with the price of the highest-calorific value (CV) grade reduced from the last session, while tags of mid- and low-CV grades were lifted, according to the ministry’s latest release.
The ESDM has published the HBA prices twice a month (on the 1st and 15th day of each month) since March, replacing its previous monthly updates to better match market dynamics.
Specifically, on Tuesday, 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 $120.20/tonne (t) for the first half of this month, down by 2.5% from the $123.32/t issued on 1 April.
The HBA-I price, gauging mid-CV 5,300 Kcal/kg GAR coal (TM 21.32%, sulphur 0.75%, ash 6.04%), was lifted by a tiny 0.1% from 1 April to $78.46/t. Notably, April 1’s HBA-I figure was the lowest since the HBA derivative was first released in March 2023, suggesting that prices of this grade still remain depressed. This aligns with market perceptions about the weak performance of mid-CV grades over the past month, Mysteel Global observed.
Meanwhile, the Jakarta government set low-CV HBA-II – gauging 4,100 kcal/kg GAR (TM 35.73%, sulphur 0.23%, ash 3.9%) – at $50.07/t for the second half of April, marking a 1.1% rise from 1 April’s $49.54/t. The HBA-III for 3,400 kcal/kg GAR (TM 44.3%, sulphur 0.24%, ash 3.88%) was pegged at $34.32/t, up by 4.9%.
In late February, the ESDM directed Indonesian coal exporters to use the HBA and derivatives to price transactions. But Mysteel Global has learnt that exporters still prefer the Indonesia Coal Index (ICI) – collectively produced by Indonesian NGO PT Coalindo Energy and industry agency Argus and updated on Fridays – for sealing deals.
Despite a six-month grace period offered by the ESDM for coal exporters to persuade their buyers to accept the HBA pricing system, experts doubt the feasibility, as the HBA and its derivatives still lag behind market dynamics. They wonder whether the delay may be created purposely by the government aiming to keep prices higher for a longer period.
“I think this is an example of sovereign countries trying to take more control of their resources, and that is just part of a wider geopolitical trend,” said Ghee Peh, an energy finance analyst at the Institute for Energy Economics and Financial Analysis, quoted by the South China Morning Post.
Importers from China, the largest destination of Indonesian coal exports, are reportedly reluctant to accept the new pricing scheme due to softening demand. Since late 2024, robust domestic production and imports, as well as sluggish winter demand, have led to excessive supply in the Chinese market, which, in turn, has discouraged participants from seaborne procurement.
China’s coal imports began to decline in March, with last month’s landed volume down by 6.4% y-o-y at 38.73 million tonnes (mnt), customs data showed.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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