- HBA tags of high-CV coal rise for 4th straight month
- Low-CV coal falls on muted Chinese demand pre-CNY
Mysteel Global: Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has updated the country’s thermal coal reference price indexes, known as Harga Batubara Acuan (HBA), for February, raising the index for high-calorific value (CV) coal significantly from January’s level, while those for medium- and low-CV grades were revised down slightly, according to the ministry’s latest release.
Specifically, the February 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 $124.24/tonne (t), up by 0.2% from a month ago, the release showed. This rise extended a three-month uptrend observed since last November, when the index was set at $114.43/t.
The HBA-I price, gauging mid-CV 5,300 Kcal/kg GAR coal (TM 21.32%, sulphur 0.75%, ash 6.04%), was decided at $82.26/t for February, compared with January’s $83.995/t, a dip of 2%.
In parallel, low-CV HBA-II and HBA-III prices, gauging 4,100 kcal/kg GAR (TM 35.73%, sulphur 0.23%, ash 3.9%) and 3,400 kcal/kg GAR (TM 44.3%, sulphur 0.24%, ash 3.88%), were at $50.52/t (down 4.2% m-o-m) and $34.38/t (down 0.9% m-o-m), respectively, the ESDM data showed.
Effectively, these two indexes have slid to their lowest points since November 2023 and January 2024, respectively, the data showed, aligning with the sluggish demand for low-CV cargoes in December and January. This partly reflected lower coal consumption in China, the largest buyer of Indonesian thermal coal, before the Chinese New Year (CNY) holiday (spanning 28 January-4 February), Mysteel Global notes.
HBA I, II, and III are primarily calculated based on spot trading activity involving Chinese and Indian buyers. In the latest adjusted HBA formula, 30% of the price is determined by trades from the fourth week two months earlier to the first week of the previous month, according to the ESDM, while the remaining 70% is based on those in the second and third weeks of the previous month.
Calculated based on coal transactions both at home and abroad, Indonesia’s HBA prices are used as a vehicle to determine prices of thermal coal sold to domestic customers. The ESDM introduced HBA-I and HBA-II in March 2023, and HBA-III in August of the same year, to better reflect price movements of different coal grades.
HBA prices also play a crucial role in determining the royalties that coal producers must pay to the Indonesian government, as well as in structuring coal contracts and pricing formulas across Indonesia.
Early this month, the Indonesian government said it considered pricing export sales of thermal coal based on HBA, although market participants suggested the proposal would face challenges being put into practice.
Note: This article has been written in accordance with a content exchange agreement between Mysteel Global and BigMint.
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