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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.
The value of Indonesia's coal exports to China during January-August 2017 reached USD $1.68 billion, up 63 percent compared to the export value of the commodity in the same period (to China) one year earlier (USD $1.03 billion) according to the Trade Attaché of the Indonesian Embassy in Beijing.
Despite the recovering coal price, actual coal production in Indonesia remained relatively low up to the third quarter in 2017. Based on data from Indonesia's Energy and Mineral Resources Ministry, national coal output reached 294.5 million tons up to 31 August 2017, roughly 62 percent of the full-year target (477 million tons) that was set by the Energy Ministry.
While we have entered the last quarter of 2017, the coal price continues to climb. Indonesia's benchmark coal price (in Indonesian: Harga Batubara Acuan, or HBA) rose 2.13 percent month-on-month (m/m) to USD $93.99 per metric ton in October 2017. The average HBA price so far in 2017 stands at USD $84.22 per ton, up significantly from an average of USD $61.84 per ton in full-year 2016.
Several big coal mining companies, listed on the Indonesia Stock Exchange, saw their shares slide drastically on Wednesday (13/09) after Indonesian Energy and Mineral Resources Minister Ignasius Jonan announced to be considering formulating new rules to determine the price of coal for domestic supplies. However, no time-frame was given as Jonan will first listen to input from the mining sector.
Indonesia's reference coal price surged in September 2017. Southeast Asia's largest economy's benchmark coal price (in Indonesian: Harga Batubara Acuan, or HBA) soared 9.6 percent month-on-month (m/m) to USD $92.03 per metric ton, from USD $83.97 in August. Indonesia's HBA is now at its highest position since December 2016.
Coal supplies in China are estimated to show a 5.8 million ton surplus in the September-October 2017 period in line with sliding coal demand in the world's second-largest economy. Therefore, coal prices should come under pressure starting from mid-August up to late October 2017. Coal demand in China will ease as local weather conditions turn normal. Meanwhile, local coal supplies are seen growing as miners want to take advantage of the higher coal price.
The coal price has gained some further momentum over the past month. Indonesia's benchmark coal price (in Indonesian: Harga Batubara Acuan, or HBA) rose 6.36 percent month-on-month (m/m) to USD $83.97 per metric ton in August 2017. The average HBA price so far in 2017 stands at USD $82.02 per ton, up significantly from an average of USD $61.8 per ton in full-year 2016.
The Indonesian government is having problems curbing the nation's coal output, especially now coal prices are at a much more attractive level compared to one year ago. Therefore, the government may consider implementing disincentives or even sanctions in order to keep coal production under control and push it down to (an annual) 400 million metric tons by 2019.
Indonesia's benchmark coal price (in Indonesian: Harga Batubara Acuan, or HBA) rose 4.6 percent month-on-month (m/m) to USD $78.95 per metric ton in July 2017. The HBA price, set by Indonesia's Energy and Mineral Resources Ministry each month, is based on (1) the Platts Kalimantan (5,900 kcal/kg GAR assessment), (2) the Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), (3) the Newcastle Export Index - formerly the Barlow-Jonker index (6,322 kcal/kg GAR) - and (4) the globalCOAL Newcastle (6,000 kcal/kg NAR) index.
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Currently, coal certainly ranks among the most interesting commodities. On the one hand, Indonesia expressed its commitment to reduce consumption of this dirty fossil fuel (that is especially used as raw material for the generation of electricity in power plants but also in various manufacturing industries such as the cement industry and textile industry) as the country seeks to become ‘carbon neutral’ by 2060 (although many doubt to what extent Indonesia is really committed to this ambition; after all, it has more immediate concerns such as the dozens of millions of Indonesians living below, and just above, the national poverty threshold).
Over the past couple of months –essentially since touching a low in August 2020– global coal prices have surged. In January 2021 coal prices were at their strongest levels in almost two years (before experiencing a mild correction in February 2021).
By revising Indonesian Government Regulation No. 23/2010, the Indonesian government plans to provide local coal miners more certainty by allowing an earlier submission of a request for the extension of mining concessions. Stakeholders in the mining sector argue that this would considerably strengthen the nation’s investment climate, specifically the coal mining industry, on the back of improved legal certainty.
Only a few months after the Indonesian government had imposed a price cap on mandatory sales of local coal to Indonesia's state-owned electricity company Perusahaan Listrik Negara (PLN) under the domestic market obligation (DMO) scheme, the government now plans to revise this regulation. Coming Tuesday (31/07) a high-level meeting is to take place where decisions will be taken.
Through Energy and Mineral Resource Ministry Regulation No. 19/2018 on the Procedures for Determining Benchmark Prices of Metal and Coal Sales as well as through Energy and Mineral Resource Ministry Regulation No. 1395 K/30/MEM/2018 on the Selling Price of Coal for the Electricity Supply for the Public Interest the Indonesian government confirmed a new set of rules in the coal mining sector, specifically regarding coal that is sold domestically under the domestic market obligation.
The big Indonesian coal miners that are listed on the Indonesia Stock Exchange expect to raise their production volumes in 2018 amid rising global demand and the subsequent stronger coal price. Moreover, most local coal companies were heavily affected by bad weather in 2017 and therefore their output had been curtailed naturally, while coal prices had actually been skyrocketing since mid-2016.
Amid rising mining commodity prices, Indonesian coal mining company Adaro Energy saw its share price surge at the start of 2018. The mining index is actually the best-performing index so far this year in Indonesia, rising 13.58 percent since the start of the year. Being a mining company - or more precisely an energy company (as it recently entered the power generation sector) - Adaro Energy is among the major beneficiaries.
The sharply rallying coal price in the second half of 2016 and its strong cash position (a sign of financial strength and liquidity) is the right recipe for listed Indonesian coal miner Harum Energy to post strong corporate earnings this year. In fact, Indonesian securities company Trimegah Securities believes that Harum Energy is the coal miner that will benefit the most of all listed coal miners on the Indonesia Stock Exchange (IDX) because 95 percent of its coal sales is sold on the spot market.
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?
Many Indonesian coal miners that are listed on the Indonesia Stock Exchange (IDX) have seen their shares surge in the past couple of months supported by the recovering coal prices. 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 from USD $50.92 per metric ton in February 2016 to USD $63.93 per ton in September.
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