Indonesia hikes thermal coal HBA prices for first half of May

• Prices of mid-CV grade raised by 3% to 2-month high
• Weak price competitiveness keeps Chinese buyers away

Mysteel Global: Indonesia’s Ministry of Energy and Mineral Resources (ESDM) on May 1 issued its thermal coal reference prices (Harga Batubara Acuan, or HBA) to guide transactions for the first half of May, notably hiking the tags of the low and mid calorific value (CV) grades from the second half of April.

The Ministry has published the HBA prices twice a month (on the 1st and 15th day of each month) since March, replacing its previous monthly updates to better match market dynamics.

Specifically, the HBA for 6,322 kcal/kg GAR coal (TM 12.26%, sulphur 0.66%, ash 7.94%) – a grade with high CV – was set at $121.15/tonne (t) for the first half of this month, up by 0.8% from $120.2/t issued on 15 April.

The HBA-I price, gauging mid-CV 5,300 Kcal/kg GAR coal (TM 21.32%, sulphur 0.75%, ash 6.04%), was raised by 3% to $80.8/t, the highest in two months. This was also the largest hike among all HBA prices, reflecting a recovery from the previous low, Mysteel Global noted.

Meanwhile, the Jakarta government set low-CV HBA-II – gauging 4,100 kcal/kg GAR (TM 35.73%, sulphur 0.23%, ash 3.9%) – at $50.43/t for the first half of May, edging up by 0.7% from 15 April’s $50.07/t.

The HBA-III for 3,400 kcal/kg GAR (TM 44.3%, sulphur 0.24%, ash 3.88%) was also pegged higher by 1.2% to $34.73/t, registering the second-largest increase among all grades.

The HBA prices were only used as pricing guidance for Indonesia’s domestic coal market previously, but the ESDM in late February directed the utilisation of these prices in coal export trades as well. However, this pricing system for exports has faced strong resistance from market participants.

Entering May, it seemed that Indonesia’s coal cargoes still failed to attract buyers from China – its largest coal export market – due to weak price competitiveness. For example, the most favoured Indonesian 3,800 kcal/kg NAR coal was only RMB 15/t lower than the comparable Chinese grade as of 7 May, both on a CFR South China basis with VAT included, narrowing from a spread of RMB 29.5/t two weeks ago, Mysteel’s calculation showed.

Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.