Benchmark price of Indonesian thermal coal dropped back below $90 a ton this month



Source: COALSPOT

According to latest ministerial decree No. 1812 K/30/MEM/2018 dated 3 May 2018, the Indonesian Coal Price Reference (HBA) decline 5.51 per cent in May 2018 compared to April HBA.

The benchmark price of Indonesian thermal coal has decreased US$ 5.22 per ton month on month to $ 89.53 per ton for May 2018 delivery for exports as well domestic except Indonesian power producers. The Minister of Energy and Mineral Resources Republic Indonesia had declared May HBA at US$ 89.53 per ton for 6322 GAR power plant coal by issuing a ministerial decree 1812 K/30/MEM/2018 dated 3 May 2018.

The Ministry of Energy and Mineral Resources Republic Indonesia has decreased the monthly Indonesian thermal coal price reference for May 2018 delivery meantime, the May 2018 HBA was 6.82% higher the comparable period in 2017.

Indonesia has capped the price of thermal coal for domestic power stations at $70 per ton if HBA is equal to or higher than US$ 70 per ton until December 2019 form 12 March 2018, in new rule was issued on 9 March 2018 (MEMR Ministerial decree 1395K/30/MEM/2018) and 1410 K/30/MEM/2018 dated 12 March 2018. However the HBA drops below $70 per ton, the domestic thermal coal price for power stations will revert to HBA. This special price for power plants is applicable for maximum100 million tons of coal per year.

US$ 70 price is based on coal as the same specification as in the Indonesian Coal Benchmark Price (HBA). Domestic Power producers used to buy 4200 to 5000 GAR coal where’s US$ 70 per ton was based on 6322 GAR coal.

An increase or decrease in four international coal indices such as Indonesia Coal Index (ICI), Platts-5900, Newcastle Export Index (NEX) and Global coal Newcastle Index (GCNC) will cause an increase or decrease in Indonesian coal price reference every month, as HBA is linked to those international coal indices. The ministerial decree No. 1812 K/30/MEM/2018 dated 3 May 2018 has not given any details about formation of HPB.

The coal price reference in Indonesia was established to fulfill the requirement of mining Law 04/2009 and ministerial decree No.17/2010. In addition to that, it aims to increase government revenue from royalties from coal producers.

Source: COALSPOT