Russia's Invasion Impacts Coal Prices, Benchmark Hits US$203.69 per Ton

Russia's invasion of Ukraine triggered turmoil in the benchmark coal price (HBA). This is because Russia is one of the world's largest coal suppliers. However, the war launched by Russia since February 24, 2022, has disrupted the supply chain, impacting coal price increases.

For March 2022, the Ministry of Energy and Mineral Resources (ESDM) announced that the HBA rose to US$203.69 per ton. This price increased by approximately 8.1% from the February 2022 HBA, which was valued at US$188.38 per ton.

This is the second time the HBA has exceeded US$200 per ton since last year. Previously, the HBA reached US$215.01 per ton in November 2021.

The HBA is the price obtained from the average of the Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt's 5900 in the previous month. The quality is standardized at 6322 kcal/kg GAR, 8% Total Moisture, 0.8% Total Sulphur, and 15% Ash.

Two derivative factors influence the movement of the HBA: supply and demand. The supply factor is influenced by weather, mining techniques, policies of supplying countries, and technical supply chain issues such as trains, barges, and loading terminals.

Meanwhile, the demand factor is influenced by electricity needs correlated with industrial conditions, import policies, and competition with other energy commodities such as LNG, nuclear, and hydro.