Indonesian Coal and Oil Benchmark Prices Show an Upward Trend Since 2016

The Indonesian Coal Reference Price (HBA) and the Indonesian Crude Price (ICP) have shown an upward trend since the beginning of 2016. The global economy's recovery following the fall in crude oil prices, coupled with increased energy demand, has driven the rise in HBA and ICP over the past three years.

According to data from the Ministry of Energy and Mineral Resources (ESDM), the Indonesian coal reference price for 6322 kcal quality coal in August 2018 increased by US$3.18 to US$107.83/ton from US$104.65/ton the previous month. This increase was triggered by a relatively improving global energy market. One factor was the increased demand for coal in China and Northern Europe, along with the inability of Australia to accelerate its coal production increase.

The improved US economy, supported by tax cuts and President Donald Trump's protectionist policies, has also led to an increase in global energy demand. This increased demand, coupled with reduced oil supply from OPEC member countries such as Iran, Libya, Angola, and Venezuela, has pushed oil prices above US$70/barrel. For reference, the average Indonesia Crude Petroleum (ICP) price in July 2018 slightly increased to US$70.68/barrel from US$70.36/barrel the previous month.