August Coal Reference Price Declines as Pandemic Drags on Demands

The Reference Coal Prices (HBA) continues its downward trend. The Ministry of Energy and Mineral Resources (ESDM) lowered August 2020 HBA by 3.49 percent lower to US$ 50.34 per ton from US$ 52.16 per ton. "The decline in August 2020 HBA is still due to the COVID-19 pandemic, which has resulted in lower demand in several coal importing countries. Meanwhile, coal reserves in the global market have also increased," said the Head of the Communications Bureau, Public Information Services, and Cooperation of the Ministry of Energy and Mineral Resources Agung Pribadi in a written statement, Wednesday (8/5).

Also triggering the global prices decline is China and India's policies, which prioritized the use of domestically-produced coal. "This had dragged down the monthly index of HBA compiler, namely ICI by 2.53 percent, Platts by 6.40 percent, GCNC down 1.07 percent, and NEX down 4.01 percent," said Agung. The HBA determination is based on the average Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platts 5900 in the previous month. The coal quality is equalized at 6,322 kcal per kilogram of GAR. The HBA will be used in the sale and purchase of coal commodities (spot) for one month at the point of delivery on a Free on Board (FOB) Vessel.