Indonesia Energy Ministry: Demand Increases, August HBA Breaks USD130.99 per Ton

The increasing demand for coal in China, Japan and South Korea has again raised global coal prices, which also affected the Reference Coal Price (HBA) in August 2021 to USD 130.99 per tonne, the highest figure in more than a decade.

“The soaring world coal price was influenced by the extreme rainy season in China which disrupted coal production and transportation activities in the country, while coal demand increased for power generation purposes which exceeded the country’s domestic coal supply capacity,” said the Head of the Communications Bureau of Public Information and Employment Services. With the Ministry of Energy and Mineral Resources, Agung Pribadi in Jakarta, Tuesday (3/8).

Agung added that the rising price was also driven by the increasing demand for coal from Japan and South Korea which was a factor in the increase in global coal prices. Previously, in February 2021 the highest HBA record was recorded at USD127.05 per tonne.

Had been sloping in February-April 2021, HBA recorded a consecutive increase in the period May-July 2021 to touch the figure of USD115.35 per ton in July 2021. Apparently, the increase continued to be consistent until August 2021 by recording a new record high.

For information, HBA is the price obtained from the average index of the Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt’s 5900 in the previous month, with quality equivalent to 6322 kcal/calories. kg GAR, Total Moisture 8%, Total Sulfur 0.8%, and Ash 15%.

There are two derivative factors that affect the movement of HBA, namely, supply and demand. In terms of supply derivatives, it is influenced by season (weather), mining techniques, supplier country policies, to supply chain technicalities such as trains, barges, and loading terminals.

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

Later, this July HBA will be used to determine the price of coal at the point of sale delivery on a Free on Board basis on a transport vessel (FOB Vessel). (KO)