The five months rally in Indonesia’s benchmark reference price also known as Harga Batubara Acuan, or HBA has come to a halt in March, recording a drop of 3.8% m-o-m and is assessed at $84.5/t, according to a ministry official.
The country’s benchmark price had been moving up since Oct’ 20 amid Chinese ban on Australian coal and subsequent increase in demand from the country, normal-than usual colder winters and industrial activities picking up pace globally post lifting of Covid restrictions.
However, this month’s HBA prices seem to have dropped due to diminished demand from China. Towards the end of winters electricity consumption in China’s business centers fell.
Also, key Indonesian coal importers, China and India are focusing on boosting their own domestic production, which has impacted demand for Indonesian thermal coal.
The HBA 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.
Indonesian spot prices also fall
Indonesian thermal coal spot prices have also been falling since past three weeks. Currently the price for popular grade 4200 GAR is assessed at $38.7/t against the highs of $50/t it touched in last week of Jan ’21.
Both Indian and Chinese buyers are delaying the booking of Indonesian coal at present amid the escalated freight rates. The freight between Kalimantan, Indonesia to India west and east coast has moved up by $7-8/t m-o-m basis and is assessed at $16/t and $19/t respectively for supermax vessel.
Outlook
Given the current scenario of heightened freights and tepid demand from India and China, HBA price is anticipated to fall further for April.
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