Coal Reference Price Slightly Decreases in September 2022

The Ministry of Energy and Mineral Resources (ESDM) set the Indonesian Coal Reference Price (HBA) at US$319.22/ton in September 2022. This price is down 0.74% or US$2.37 compared to the HBA in August 2022.

According to the ESDM Ministry, this is influenced by the decrease in the average coal price index used to compile the HBA, namely the average price of the Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt's 5900.

The ESDM Ministry also stated that the decrease in HBA in September 2022 was influenced by Chinese policies.

"The increase in China's coal production in their efforts to overcome the electricity crisis caused by the heatwave and drought affecting its hydropower plants also contributed to the decline in global coal prices," said Agung Pribadi, Head of the Bureau of Communication, Public Information Services, and Cooperation of the ESDM Ministry, in a press release on Friday (1/9/2022).

"Another contributing factor is China's efforts to continue increasing coal imports from Russia and Australia. This is one of the reasons why the NEX and GCNC indices continue to show an upward trend," Agung continued.

The HBA movement this year reached its highest value in June 2022, where the HBA rose to US$323.91/ton.

The ESDM Ministry assessed that the June 2022 HBA was driven by the geopolitical conditions in Europe, impacted by the Russia-Ukraine conflict, and the electricity crisis in India due to the heatwave.

Then, entering the July-September 2022 period, the HBA tended to fluctuate. However, in general, the HBA in Q3 2022 is still at a very high level compared to previous years, as seen in the graph.

The ESDM Ministry also explained that there are two derivative factors that influence the movement of the HBA, namely supply and demand.

"Supply-side factors are influenced by weather, mining techniques, policies of supplier countries, and technical aspects in the supply chain such as trains, barges, and loading terminals," explained the ESDM Ministry on its official website.

"Meanwhile, demand-side factors are influenced by declining electricity needs correlated with industrial conditions, import policies, and competition with other energy commodities, such as LNG, nuclear, and hydro," it continued.