Indonesian Ministry of Energy and Mineral Resources has set coal reference price for Sep’17 at nine-month high of USD 92.03/MT.
The reference price also known as Harga Batubara Acuan (HBA) for Sep’17 was 10% higher on the month compared with USD 83.97/MT in Aug’17 and also 44% higher on the year compared with USD 63.93/MT set during Sep’16.
The recent increase in reference price is mainly attributed to the rising coal demand and bad weather conditions in Indonesia which has kept coal supply tight.
The HBA reference price for the month becomes the base price for 6322 GAR coal which is then used as a basis to calculate coal price of 77 other Indonesian coal products and royalties to be paid to the government by the mining firm.
Indonesian Coal Offers:
Chinese buying has kept coal prices on the higher end, as the domestic coal supply in Indonesia still remained constant. Coal production was hampered in the past few months due to bad weather, despite coal miners’ effort to ramp up the supplies; it was not enough to cater the growing coal demand.
Limited cargo availability of 4200 GAR coal has pushed coal offer for the material to USD 46/MT, FoB Kalimanthan on geared cargo vessel basis, while on gear-less cargo basis, offer for 4200 GAR coal was quoted at USD 44-45/MT, FoB Kalimantan.
Buying from India has also gathered pace after monsoon period. Market participants have informed that higher grade coal is not buyable at this moment of time due to high prices, however, due to high CV coal requirement in the stock and sale market, buying for high CV coal is expected to increase.
5600 GAR coal was trading at USD 74/MT, FoB Kalimatan this week, while offers for 5000 GAR coal was heard at USD 64.50/MT, FoB Kalimantan.
Low coal stock level at power plants would also push coal demand, as the combined coal stock at Indian power plants has fallen to 10.416 MnT as on 10 Sep’17, enough for 7 days of power generation. Moreover, CIL’s coal production is also affected due to heavy rains in the eastern part of the country which would support coal imports.
A Mangalore based Trader has quoted stock and sale for 5000 GAR coal at INR 5200(GST+ Compensation cess of INR 400/MT extra) in the port. He further quoted stock and sale offer for relatively old 3800 GAR material at INR 3156/MT.
On CFR Basis, 4200 GAR coal was available at USD 53-54/MT while 3800 GAR coal was offered at USD 45/MT in India.
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