The Indonesia’s benchmark price benchmark reference price also known as Harga Batubara Acuan, or HBA that saw an increase of 2.6% last month has once again risen by 3.4% m-o-m for May at $89.7/t, according to a ministry official.
The benchmark price has been recording an increase for last two months due to increased bookings of Indonesian coal from China. The lower-than expected rains in the country that reduced hydropower availability, the closure of Inner Mongolia borders amid rising COVID-19 cases and increased safety checks at domestic coal mines has resulted in shortage of thermal coal in China and increased demand for imported coal.
HBA price’s past trend
While last year, HBA price saw a downtrend from April-Oct’20 due to pandemic-led lowered demand, the same recovered significantly between Nov’20-Feb’21 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.
It was only in Mar’21 that the HBA price fell due to diminished demand from China as towards the end of winters electricity consumption in Chinese business centres fell. However, HBA picked up once again in April due to above mentioned reasons.
What is HBA price?
The HBA is a monthly average price based 25% each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).
It 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 coal index up today
Indonesian thermal coal spot prices that have been rising since past six weeks are once again up by $1.45/t in today’s ICI index. Currently the price for popular grade 4200 GAR is assessed at $53.6/t, FoB basis, while freight between Kalimanthan to India west coast for supramax vessel is assessed in the range of $22-24/t, up by 43% in last two months.
This increase in index is completely driven by escalated Chinese demand. While Chinese are making bookings for Indonesian coal, Indians are still at the sidelines due to heightened freights, reduced power demand from various industries due to COVID-led restrictions and increased usage of domestic coal.
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