Coal miners have become cheerful over the past two months as coal prices have surged sharply. Indonesia's thermal coal price (in Indonesian: Harga Batubara Acuan, abbreviated HBA), a monthly price set by Indonesia's Energy and Mineral Resource Ministry and which is based on domestic and global coal prices, soared 9.5 percent (m/m) to USD $63.93 metric tons in September 2016, touching its highest level since April 2015. Moreover, in the preceding month the HBA had already surged by 10.1 percent (m/m). What explains this rise and is it sustainable?

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Indonesia's thermal coal price (in Indonesian: Harga Batubara Acuan, abbreviated HBA), a monthly price set by Indonesia's Energy and Mineral Resource Ministry and based on both domestic and global coal prices, rose 9.5 percent month-on-month (m/m) to USD $63.93 metric tons in September 2016, touching the highest level since April 2015. The recent rally is caused by supply cuts in combination with rising coal demand from China. Regarding the near-term, thermal coal prices are believed to have more upside room due to the approaching winter season.

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Contrary to the positive performance of most emerging market stocks, Indonesia's benchmark Jakarta Composite Index fell more than one percent on Monday (15/08). While other markets were supported by advances in crude oil prices and a rally in Chinese shares, Indonesian shares declined on the nation's weak trade data that were released by Indonesia's Statistics Agency today. Investors were eager to use this opportunity to engage in profit taking as the Jakarta Composite Index nearly touched a record-high level after an impressive recent rally.

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Over the past two months global coal prices have surged, primarily on the back of rising coal demand in China where local coal production capacity was curtailed as authorities seek to curb industrial overcapacity. Indonesia's coal price (Harga Batubara Acuan, abbreviated HBA), a monthly rate set by the nation's Energy and Mineral Resource Ministry, rose 10.1 percent (m/m) to USD $58.37 per ton in August from USD $53.00 per ton in the preceding month, a remarkable rebound that pushed the HBA to a one-year high.

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In today's cabinet reshuffle (27/07) economist Sri Mulyani Indrawati was appointed as Indonesia's new finance minister, replacing Bambang Brodjonegoro. One day earlier, when few were aware about this surprise move, Sri Mulyani spoke briefly to reporters - in her position as managing director and chief operating officer of the World Bank - about the Indonesian and global economy. She sees two matters that negatively affect Indonesia's economic growth: slowing economic growth in China and the Brexit issue.

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The ASEAN member nations are unwilling to issue a joint statement regarding the recent ruling of an international tribunal that stated there is no legal basis for China to claim historic rights to resources within the South china Sea area that falls within its so-called nine-dash line. Although the Philippines (which had filed for international arbitration at the Netherlands-based Permanent Court of Arbitration) requested ASEAN to respond to the tribunal's ruling, Cambodia has managed to block this move.

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After an international tribunal came to the conclusion earlier this week that China has no legal claims to most of the South China Sea, there exists a lack of unity among Southeast Asian nations as well as the Association of Southeast Asian Nations (ASEAN) to respond to the matter. Among ASEAN officials there was no agreement to issue a joint statement regarding the ruling of the Hague-based Permanent Court of Arbitration as ASEAN member nations are split on the matter.

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Today, around 16:00 pm local Jakarta time, members of the Den Haag-based Permanent Court of Arbitration are expected to issue the "South China Sea ruling", or the decision over a legal challenge - filed by the Philippines in 2013 - against China's efforts to establish military installations on or near strategic points in the South China Sea. Based on its "nine-dash line", China claims over 80 percent of the South China Sea. Other nations in the region, however, object to China's claims.

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Diplomatic relations between Indonesia and China face another challenge as reports suggest that the Indonesian navy fired at an illegal Chinese fishing boat near the Natuna Islands in the South China Sea on Saturday (18/06). According to Chinese sources the incident injured one Chinese fisherman, while Indonesian sources claim there had been no injuries. The waters in the South China Sea are claimed by China, while Indonesia considers these waters part of its exclusive economic zone.

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It was a bad start of the new trading week. Stocks in Asia were deep in the red due to risk aversion, falling the most in four weeks amid concern about the "Brexit" referendum, uncertainty before this week's central bank meetings in the USA and Japan, falling crude oil prices, and the worst mass shooting in modern US history. Indonesia was among the affected markets; the benchmark Jakarta Composite Index fell 0.84 percent to 4,807.23 on Monday (13/06), while the rupiah only depreciated slightly to IDR 13,298 per US dollar (Bloomberg Dollar Index).

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Indonesia's November 2016 coal price broke a record. The nation's benchmark thermal coal price (locally known as the Harga Batubara Acuan, HBA) - a monthly price set by Indonesia's Energy and Mineral Resources Ministry and which is based on domestic and international coal indices - jumped 22.9 percent month-on-month (m/m) to USD $84.89 per metric ton this month, the highest monthly HBA price rise ever recorded. Compared to the start of the year, Indonesia's coal price has now risen 59.6 percent, the sixth straight monthly gain. But is this reason for euphoria?

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Many things happened this week. A devastating terror attack in Nice (France) killed at least 84 people, while - at the time of writing - a coup attempt occurred in Turkey (that seems to have failed). However, these events have little impact on the performance of global stocks and currencies (with the obvious exception of the Turkish lira). Wall Street touched record highs, while Indonesian stocks rose to a 13-month high and the Indonesian rupiah strengthened to a four-month high. Lets take a closer look at the performance of these markets over the past week.

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Steel pipe and tube manufacturer Steel Pipe Industry of Indonesia (Spindo), which has the largest steel pipe production capacity among manufacturers in Indonesia, is expected to show solid corporate earnings in the period ahead as the company bought raw materials for its production process when the hot-rolled coil (HRC) price was near its lowest at USD $265 per ton. Investa Saran Mandiri expects that Spindo's earnings will improve markedly starting from the second quarter of 2016 as the HRC price has risen to USD $485 per ton in May 2016.

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When we are looking at economic forecasts for potential growth prospects in Indonesia, it makes sense to have an idea of what is happening in the peripheral regions. China is still used as a firm indicator of where we are headed with emerging markets and here we will look at some of the reasons why the People's Bank of China's (PBOC) is still expecting growth even if potentially negative factors occur.

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The price of steel has surged 20 percent to USD $365 per ton in April 2016 from USD $305 per ton at the start of the year. The primary reason for the higher steel price is China's plan to curtail the country's installed steel production capacity by a further 150 million tons over the next five years. In recent years the steel price has dropped significantly due to the global oversupply, mainly originating from the chronic steel oversupply in China where domestic demand declined amid the nation's economic slowdown.

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The USD $1 billion acquisition of Southeast Asia-based e-commerce platform Lazada Group SA by China's e-commerce giant Alibaba Group Holding Ltd may give rise to a larger flow of Chinese products into Indonesia. Lazada is an e-commerce platform that operates in Indonesia, Malaysia, the Philippines, Thailand and Vietnam. Southeast Asia is an interesting market for Alibaba as only 3 percent of retail sales are conducted online in this region, implying huge growth opportunities. Meanwhile, Alibaba has been eager to expand abroad as growth in China has been slowing.

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Indonesian Minister of Maritime and Fisheries Susi Pudjiastuti said Indonesia could raise the (illegal) fishing dispute between Indonesia and China - that occurred near the Natuna Islands in the South China Sea over the weekend - at the International Tribunal for the Law of the Sea if China's authorities fail to respect Indonesia’s sovereignty over its sea territory. Last Saturday (19/03) a Chinese ship (Kway Fey 10078) was spotted fishing illegally within Indonesia's Exclusive Economic Zone in the South China Sea. Its crew was arrested and ship confiscated. However, two armed Chinese coast guard ships arrived to intervene.

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The International Monetary Fund (IMF) expects Indonesia's economy to expand 4.9 percent year-on-year (y/y) in 2016, slightly up from a 4.8 percentage point (y/y) growth of gross domestic product (GDP) in 2015. On Tuesday (15/03) Luis Breuer, IMF Mission Chief for Indonesia, said the Washington-based lender projects limited growth (+0.1 percent) of Indonesia's private consumption this year. Regarding growth of investment and government spending in 2016, the IMF holds a more positive view. On the same day, the World Bank cut its forecast for Indonesia's 2016 GDP growth by 0.2 percent to 5.1 percent.

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In order to improve communication and avoid language barriers, the Indonesia Investment Coordinating Board (BKPM) plans to open a special service desk for Chinese investors. BKPM, the investment services agency of the Indonesian government, sees language barriers between Chinese investors and Indonesians as a major obstacle; one that blocks foreign direct investment from China into Indonesia. The new desk, specifically for investment from China or Hong Kong, should improve communication hence improving realization of China's investment plans.

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Tomorrow (05/02), Statistics Indonesia is scheduled to release Indonesia's official full-year 2015 economic growth figure. Nearly all analysts expect to see a figure that reflects the continuation of slowing economic growth. Southeast Asia's largest economy expanded 5.0 percent in 2014 and this is expected to have eased further to 4.7 percent or 4.8 percent in 2015 on the back of (interrelated) sluggish global growth, low commodity prices, and weak export performance. Domestically, Indonesia has or had to cope with high interest rates and inflation (hence curtailing people's purchasing power and consumption as well as business expansion).

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