Indonesia’s benchmark reference price also known as Harga Batubara Acuan, or HBA for Jan ’21 is at $75.8/t, up by 27% m-o-m, according to a ministry official.
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.
The country’s benchmark price had been falling since Apr ’20 after the pandemic led to a lockdown in most countries and a subsequent drop in energy demand. After falling for six months straight, the HBA picked up for the first time in Oct ’20.
The demand for Indonesian coal from China (key importer of Indonesian coal) amid intensifying winters and domestic coal shortage has lent support to the Indonesian HBA price index. Also, the improvement in industrial activities in other key importing countries like Japan, South Korea, and India has also bolstered Indonesian coal demand and subsequently the HBA benchmark price.
Indonesia targets 550 mn t coal production for 2021
Indonesia’s Ministry of Energy and Mineral Resources has set the country’s coal production target at 550 mn t for this year, a figure unchanged from last year due to the raging pandemic.
Energy ministry coal business director Sujatmiko commented in a conference that the production target takes into account economic recovery, following the Covid-19 pandemic, for both the domestic and export market.
Outlook
In China, the domestic coal of 5,500 kcal/kg NAR grade is currently trading at RMB 800/t FOB ($123.7/t) and that too the availability is scarce due to coal supply shortage in China in the midst of a severe winter. Whereas, Indonesia’s 5500 kcal/kg GAR grade coal prices are at around $77-78/t, CNF Qingdao, China basis. Subsequently, Indonesia’s HBA price is expected to continue on a rising trend amid expected high demand from China.
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