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Despite Indonesian President Joko Widodo having signed a regulation that will lead to a relatively cheap coal price for domestically-sold coal under the domestic market obligation, shares of Indonesian coal miner Adaro Energy rose 1.39 percent to IDR 2,190 a piece on Thursday (08/03).
Indonesian President Joko Widodo signed Government Regulation No. 8/2018 on the Implementation of Mineral and Coal Mining Business Activities (Regulation No. 8/2018) on Wednesday March 7th, 2018. This implies that the Indonesian government changed the price mechanism for coal that is sold at home under the domestic market obligation (DMO) scheme. Through the DMO, the central government forces local coal mining companies to sell part of their coal production at home.
Indonesia's benchmark thermal coal price (Harga Batubara Acuan, or HBA) touched a multi-year high in March 2018. The HBA, which is determined by Indonesia's Energy and Mineral Resources Ministry on a monthly basis (and which is based on several global and domestic indexes), rose 1.2 percent month-on-month (m/m) to USD $101.86 per metric ton in March 2018, its highest position since May 2012.
After receiving criticism from various stakeholders, the Indonesian government reportedly decided to postpone the implementation of a new regulation that requires all domestic coal, palm oil and rice exporters to use ships that are owned by local sea shipping companies and requires them to use domestic insurance.
Borneo Olah Sarana Sukses, an Indonesia-based coal mining company, set its share price at IDR 400 a piece (approx. USD $0.03) for the initial public offering (IPO) on the Indonesia Stock Exchange. The coal miner will offer 400 million shares, or 28.57 percent of the company's total share equity, to the public through the corporate move. As such, the company is set to raise IDR 160 billion (approx. USD $11.8 million).
Indonesian coal mining company Borneo Olah Sarana Sukses will soon conduct its initial public offering (IPO) on the Indonesia Stock Exchange. The company plans to offer 400 million shares, equivalent to 28.57 percent of its share equity, to the public through the corporate move. Listing on the local exchange is scheduled for 21 February 2018.
Coal demand remains high, particularly due to robust demand from China, the world's largest coal importer. This brings the projection for the full-year 2018 coal price to the range of USD $98.50 - $107.00 per metric ton. So far this year the coal price (ICE NewCastle Coal January 2018) surged around 4 percent, while in full-year 2017 the price had surged 57.09 percent.
Domestic coal demand in Indonesia is estimated - by the Indonesian government - to reach 114.51 million tons in 2018, up around 6 percent from estimated demand in 2017. Bambang Gatot, Director General for Coal and Minerals at the Energy and Mineral Resources Ministry, said coal-fired power plants remain the biggest domestic consumers of coal.
Indonesia's benchmark thermal coal price (Harga Batubara Acuan, or HBA) - set on a monthly basis by Indonesia's Energy and Mineral Resources Ministry (and which is based on domestic and international coal indices) - fell 0.8 percent to USD $94.04 per metric ton in December 2017. This decline is attributed to falling coal demand in China where authorities decided to curb coal imports.
Coal imports into China are expected to recover in the last two months of the year and therefore various analysts say the coal price is able to touch beyond USD $97 per ton before the year-end. In October coal imports into China - the world's largest coal importer - had fallen by a whopping 24 percent (m/m) to 21.3 million tons due to the availability of plenty domestic coal supplies.
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After its one-week holiday, Indonesia's main stock index (IHSG) started in negative territory. The index fell 0.93 percent to 4,597.78 on Monday (12/08) with the country's miscellaneous industry sector and the consumer goods sector leading the fall. It is interesting to note that most Indonesian mining companies showed significantly rising share prices as prices of mining commodities are expected to increase. According to Morgan Stanley, coal imports to India will grow while the global coal price has already reached its lowest point.
State-owned electricity provider Perusahaan Listrik Negara (PLN) stated that consumption of electricity in Indonesia grew 7.2 percent to 90,48 terawatt hour (twh) in the first six months of 2013 compared to the same period last year. Head of PLN's Commercial Division, Benny Marbun, explained that Indonesia's industrial sector particularly consumed more electricity. Although industrial customers of PLN only grew by 4.5 percent in Semester 1-2013 (YoY), industrial electricity consumption grew 8.3 percent (YoY).
Indonesia already is a strong trade partner to a number of countries in Europe. Based on data released by Indonesia's Ministry of Trade, the Netherlands and Spain are two European countries that import a considerable amount of Indonesian products and thus are important contributors to Indonesia's trade surplus in the non oil & gas sector. But other European nations, such as Germany and Russia, pressure Indonesia's trade surplus. It indicates that, despite the wide distance, Indonesia and Europe have a close and valuable trade relationship.
Indonesia's trade balance recorded another deficit in April 2013 as imports (USD $16.31 billion) exceeded exports (USD $14.70 billion). April's trade deficit, amounting to USD $1.62 billion, was mainly due to continued weak commodity exports in combination with strong oil, basic machinery and utensils imports. After five consecutive months of deficits up to February, Indonesia’s trade account reported a surplus of USD $330 million in March, but fell back into deficit in April. From January to April, Indonesia's trade deficit stands at USD $1.85 billion.
The chairman of the Indonesia Coal Mining Association said that Indonesia's coal exports are expected to increase from 310 million tons in 2012 to 330 million tons in 2013, a 6.5 percent increase. Coal producers have been facing a tough period since July 2008 when global coal demand weakened and triggered volatile - but mostly declining - coal prices ever since. Coal demand from China and India, however, is expected to increase this year.
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