Coal Prices Plunge in May 2023: How are Indonesian Thermal Coal Stocks Performing?

At the beginning of 2023, the Indonesian benchmark coal price (HBA), which follows international markets, opened at US$305.21 per ton. This figure is up 8.43% from the end of 2022, which reached US$281.48 per ton.

In February 2023, the HBA decreased by US$28.16 per ton, to US$277.05 per ton. Agung Pribadi, Head of the Bureau of Communication, Public Information Services, and Cooperation of the Ministry of Energy and Mineral Resources (ESDM), explained the reason for the decline.

"The decrease in coal prices is due to the decrease in coal demand from Europe because the weather in Europe has started to warm up," said Agung, quoted from the ESDM website, Monday, February 13, 2023.

Agung added that, in addition to this factor, the European gas supply conditions also play a role in determining the fluctuation of the HBA.

A month later, the HBA was determined using a new method. The price increased from February, reaching US$283.08 per ton in March 2023. Meanwhile, in April 2023, the benchmark price decreased again, to US$265.26 per ton.

May was a bleak month for those profiting from the black mineral. Coal prices continued to fall, with the benchmark reaching US$206.16 per ton.

As reported by *Katadata*, the coal price on ICE Newcastle for the June 2023 contract was at US$140.5 per ton at the end of trading on Thursday, May 25, 2023, down US$9.5 or 6.33% compared to the previous day's position. Throughout the year, the price has fallen more than 64% from US$396.15 in January.

The S&P Global Commodity Insight report states that global coal prices are under significant pressure. This is due to weak demand from the two largest coal-consuming countries in the world, China and India.

Coal prices worldwide had previously peaked on September 5, 2022, reaching US$463.75 per ton. This was the highest ever recorded, according to *CNBC Indonesia*.

So, how has the movement of Indonesian coal stocks been lately?

The share price of PT Bayan Resources Tbk has been continuously declining in May 2023. Initially, the share price of the issuer with the code BYAN reached Rp21,225 per share on Tuesday, May 2, 2023.

BYAN experienced a continuous decline from May 10-15, 2023, from Rp20,400 to Rp18,875 per share.

The share price fell further after trading on May 25, 2023, dropping from Rp18,900 to Rp18,150 per share.

Worse, this share price plummeted to the auto reject lower (ARB) at the closing of trading on the Indonesia Stock Exchange (BEI), Tuesday, May 30, 2023, at Rp16,075 per share. Other top coal issuers, however, managed to rise, according to *Investor.id*.

In this month, BYAN recorded a share price increase only four times.

Another stock issuer, PT Bukit Asam Tbk, also saw many declines in May 2023. On May 2, 2023, the share price reached Rp3,860 per share. For three consecutive days after that, this share price plummeted, reaching Rp3,360 per share at the close of trading on May 5, 2023.

In one month, the share price of the SOE issuer with the code PTBA rose five times. At the close of trading on May 30, 2023, it reached Rp3,090, up from Rp2,960 per share on May 29, 2023.

Moving on to PT Adaro Energy Indonesia or ADRO, which has the smallest share value compared to the two issuers above. On May 2, 2023, its price reached Rp2,980 per share. ADRO experienced a significant decline in trading on May 5, 2023, reaching Rp2,790 per share. On May 4, 2023, its value reached Rp2,920.

*Katadata* reported that the ADRO share price at the opening of trading on Tuesday, May 23, 2023, immediately plummeted 6.9% to reach the ARB at Rp2,290 per share. Year-to-date, its shares have fallen by 36.2%.

After that, ADRO's share price declined daily. On May 29, 2023, it was only Rp2,070 per share. However, on May 30, 2023, there was an increase to Rp2,110.

The decline in ADRO's share price is suspected to be due to a dividend trap. A dividend trap is when market players buy shares of an issuer that seems high and attractive, but after the ex-date, the share price plummets. As a result, investors are trapped buying at a high price, during the cum date, and have to watch the price of their shares fall after the cum date.