The government of Indonesia has set its thermal coal benchmark price (known as HBA price) for October at $51/t, up 3.2% m-o-m from $49.4/t in the previous month, the first rise since Apr’20.
Demand recovery supports HBA price
The Ministry of Energy and Mineral Resources recently said in a statement that the rise in the October HBA was in line with increased coal price in the global market triggered by signs of demand recovery in China and Japan.
Despite China’s import quota policy to prioritize domestic production, demand for imported coal continued to rise as import is cheaper than domestic coal, Ministry Spokesman Agung Pribadi said.
Meanwhile, coal demand in Japan has increased following recovery in the steel and automotive industries, helping pushed coal price higher. The increase in demand for coal in several countries led to an increase in the average monthly index of the HBA compiler, namely ICI up 0.53%, Platt’s up 0.12%, GCNC up 6.29%, and NEX up 6.01%.
Having increased by 0.28 % to $67.08/t in Mar’20, the HBA has continued to decline since then due to falling demand amid global economic slowdown triggered by the Covid-19 pandemic.
Outlook ahead
Indonesian coal producers are hopeful that HBA price hike could be an indicator of rebound in coal prices by the end of this year, Executive Director of the Indonesian Coal Mining Association (ICMA), Mr. Hendra Sinadia said.
He also added that demand for coal will usually increase in the fourth quarter when winter approaches in importing countries. He further said that:
“Prices have risen slightly this time, partly because China has begun to loosen import restrictions as their domestic coal prices have also started to rise so they have pushed imports.”
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