Indonesia’s Ministry of Energy and Mineral Resources has lowered its benchmark HBA (also known as Harga Batubara Acuan) thermal coal price for July month at $52.2/t, down by 28% y-o-y at $71.9/t in Jul’19 and by 1.5% m-o-m at $52.9/t in Jun’20. The HBA price at this level was last recorded four years back in April 2016.
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 global COAL Newcastle (6,000 kcal/kg NAR).
Price indicator: The HBA price for thermal coal is the basis for determining the prices of 77 Indonesian coal products and for calculating the royalty amount producers have to pay for each metric tonne of coal sold.
Indonesia’s coal export trade is being adversely impacted due to the spread of COVID-19 resulting in demand plunge and stringent coal policies of its key importers, China and India
China’s import reluctance
China is curbing coal arrivals through import quotas and quality restrictions on downstream users, such as utilities, following record imports (148.7 mn t) for the first five months of the year.
- Along with this, in past one month, the country has stepped up customs checks for coal imports, leading to lengthy processing delays at ports, as the country seeks to support the domestic coal industry.
- The coal inventory at China’s six major power plants along the coastal areas have moved up by 4% in last twenty days and stands at 16.2 mn t, whereas daily consumption has moved down by 7% and stands at 0.62 mn t as on 6 Jul’20, CoalMint sources have revealed.
- This implies that there is a rise in coal stock but decreased consumption by Chinese power plants, indicating a dull near-term outlook for imports in the country.
India’s surged domestic availability
In case of India also, the government is promoting domestic coal usage amid inventory build-up due to COVID-19 led subdued power demand.
- As on 2 Jul’20 the total coal stock at 134 power plants stood at around 46.4 mn t which is sufficient for 27 days against an average of 24 mn t (15 days stock) in Jul’19.
- Whereas coal stock of India’s major miner, CIL, and its subsidiaries stood at 75.1 mn t as on 3 Jul’20 against 36.9 mn t on same day last year.
- Amid the increased availability of domestic coal, there is limited demand for Indonesian imports utilised in the power sector.
Indonesian coal price
Indonesia’s popular grade 4200 kcal/kg GAR coal price is currently reported to be around $23.6/t, FoB Kalimantan and at $30.7/t, CNF India basis (average of both east and west coast ports), down by 33% y-o-y basis.
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