Coal Industry Indonesia Update: No End to Slumping Coal Prices
There remains little hope to see rebounding coal prices soon. Indonesia's benchmark thermal coal price (Harga Batubara Acuan, or HBA), a monthly price set by the Ministry of Energy and Mineral Resources, fell another 4.29 percent month-to-month (m/m) to a new record low of USD $50.92 per metric ton (FOB) in February 2016 from USD $53.20 in the preceding month. Coal prices have difficulty to rise amid low crude oil and gas prices, while renewable energy sources are gaining popularity. Meanwhile, demand from China and India for Indonesian coal is falling.
China, the world's largest energy consumer, saw its coal imports decline in the first month of 2016. Imports of coal into China fell 9.2 percent to 15.9 million tons in January 2016. Meanwhile, India (one of the world's top coal consumers) is boosting domestic production of coal in order to reduce reliance on imports. Declining coal demand from China and India are a major cause of continuously falling coal prices.
The only cause for some optimism is that Colombia announced its coal production in 2015 fell 3.5 percent (y/y) to 85.5 million tons, hence slightly relieving the global supply glut.
Further Reading: Overview of Indonesia's Coal Industry
When global prices will rise significantly again (if that is a possibility at all) remains unclear. For sure, it seems highly unlikely for coal prices to rise when crude oil and gas prices remain as low as they are today. Meanwhile, Europe and the USA are also making advances with renewable energy sources. However, for the moment renewable energy will not yet be a major threat to coal, particularly as coal-fired power plants are still being constructed in the Asian region.
Indonesian Production, Export, Consumption & Price of Coal:
| 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | |
| Production (in million tons) |
217 | 240 | 254 | 275 | 353 | 412 | 474 | 458 | 392 |
| Export (in million tons) |
163 | 191 | 198 | 210 | 287 | 345 | 402 | 382 | 295 |
| Domestic (in million tons) |
61 | 49 | 56 | 65 | 66 | 67 | 72 | 76 | 87 |
| Price (HBA) (in USD/ton) |
n.a | n.a | 70.7 | 91.7 | 118.4 | 95.5 | 82.9 | 72.6 | 60.1 |
Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources
Indonesian Government's Benchmark Thermal Coal Price (HBA):
| Month | 2012 | 2013 | 2014 | 2015 |
2016 |
| January | 109.29 | 87.55 | 81.90 | 63.84 | 53.20 |
| February | 111.58 | 88.35 | 80.44 | 62.92 | 50.92 |
| March | 112.87 | 90.09 | 77.01 | 67.76 | |
| April | 105.61 | 88.56 | 74.81 | 64.48 | |
| May | 102.12 | 85.33 | 73.60 | 61.08 | |
| June | 96.65 | 84.87 | 73.64 | 59.59 | |
| July | 87.56 | 81.69 | 72.45 | 59.16 | |
| August | 84.65 | 76.70 | 70.29 | 59.14 | |
| September | 86.21 | 76.89 | 69.69 | 58.21 | |
| October | 86.04 | 76.61 | 67.26 | 57.39 | |
| November | 81.44 | 78.13 | 65.70 | 54.43 | |
| December | 81.75 | 80.31 | 69.23 | 53.51 |
in USD/ton
Source: Ministry of Energy and Mineral Resources