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Monday, 17 August 15
INDONESIAN THERMAL COAL REFERENCE PRICE HITS RECORD LOW AGAIN!
 COALspot.com - The Director General of Mineral and Coal of Indonesia revised down Indonesian coal benchmark price once again to US$ 59.14 per MT for 6322 GAR coal for August 2015 delivery. The August price reference for Indonesian coal declined just 0.03% or US cents 2 per MT month over month and lost 7.36% year to date.
According to the date from Director General shows that, the government has fixed US$ 14.61 per MT (decline 0.07% month on month) for the coal with calorific value 2,995 kcal/kg on GAR with total moisture 50.10% on as received basis for August 2015 delivery. The royalty and taxes will be calculated based on this declared HPB. In the meantime, the government also fixed US$ 42.93 per MT as HPB for 5000 GAR coal with total moisture 22.40%, Ash 8.90% and Sulphur 0.54% for August 2015 deliveries.
Indonesian thermal coal reference price or called HBA recorded the lowest level in 80 months in August or since launching of HBA by the government of Indonesia in January 2009.
Indonesian coal benchmark price for August 2015 was calculated based on calorific value of 6,322 kcal/kg (GAR), stated to be using a formula based on the July 2015 index average of ICI-1 (Indonesia Coal Index) 25%, Platts-5900 25%, NEX (Newcastle Export Index) 25%, and GC (globalCoal Index) 25% and its was calculated considering coal with GCV (GAR) 6,322 kcal/kg, Total Moisture (arb) 8.00%, Total Sulphur 0.8% (arb), Ash Content 15 % (arb) and delivery free on Board (FOB) Vessel basis and apply to spot contract, delivery between 1 – 31 August 2015.
The highest benchmark price was declared by the Ministry of Energy & Mineral Resources of Indonesia in February 2011 and compared today's price the February 2011 price was higher by US$ 67.91 per MT.
The government of Indonesia was publishing a monthly coal price reference (HBA & HPB) since January 2009 to be used by coal producers for all spot and term contracts. However, the official implementation of HBA was commenced since September 2011. According to government regulation, the coal benchmark price must be used by the holders of production operation IUPs, special production operation IUP's, and CCoWs as a reference in determining the coal selling price for a particular period.
The declared HBA in August 2015 was 15.86 per cent or $ 11.15 lower compared to the same period in 2014.
HBA of February 2011 was the highest since the launching of HBA by the government of Indonesia (US$ 127.05 / MT for 6322 GAR coal) and the lowest was declared in this month (US$ 59.14/ MT).
This month declared price is only valid for the spot price (loading on or before 31 August 2015), while as for term price (up to 12 months supply), the average reference price (HPB) of the previous three months will be used to determine the selling price. (50% of the latest available month HPB (this month) 30% one month prior HPB and 20% of two-month prior HPB).
The government also declared price marker for eight brands of Indonesia's coal, which are most commonly traded in the market. Those eight brands act as the benchmark and used to calculate other 66 coal types with a quality similar to the coal price markers.
For sales in the barge, the reference price is reduced by barging and trans-shipment costs from the barge to the vessel. The government has recently issued a regulation (644.K/30/DJB/2013 dated 21 March 2013) to regulate or determine coal prices on FOB barge. The government also fixed the freight for barging, surveyor, insurance and etc., to determine FOB barge price. Transshipment cost US$ 4.00/MT + Surveyor cost US$ 0.25/MT + Insurance 0.80% per shipment + Barging cost (for 270 footer - (US$ 0.0221 X barging distance) + US$ 3.7406, for 270 - 330 footer - (US$ 0.0184 X barging distance) + US$ 3.1172 and > 330 footer - (US$ 0.0154 X barging distance) + US$ 2.6002.
The coal price reference is being established to fulfill the requirement of mining law 04/2009 and ministerial decree No.17/2010. In addition to that, it aims to increase government revenue from royalties from coal producers.
The excess of coal supplies and weak demand, fast developments of renewable energy and fall in oil prices are still to be blamed for delay of price recovery or falling of prices. Today’s price levels are not supporting any new investments or new explorations in coal mines.
According to reports, the free cash flow of various Indonesian coal miners have turned negative, the generated cash from coal production cannot cover companies’ operational costs. Big Indonesian coal players are now eager to diversify into other businesses such as power generation and logistics.
Low coal prices have big implications for exporting countries like Indonesia, Australia, South Africa and Russia. We believe it will take several years to recover fully as the supply is still quite higher compare to the demand and also the price of oil has also falling drastically. The price of oil fallen from more than $100 per barrel in June 2014 to under $49 today.
However according to Medium-Term Coal Market Report 2014, the global coal demand growth has been slowing in recent years, and the report sees that trend continuing. Coal demand will grow at an average rate of 2.1% per year through 2019.
According to the report, the global demand for coal over the next five years will continue marching higher, breaking the 9-billion-tonne level by 2019. The report notes that despite China’s efforts to moderate its coal consumption, it will still account for three-fifths of demand growth during the outlook period. Moreover, China will be joined by India, ASEAN countries and other countries in Asia as the main engines of growth in coal consumption, offsetting declines in Europe and the United States.
The government of Indonesia is also implemented a new income tax of 1.5% on the delivery value to domestic or export value of the coal starting from 8 August 2015. The new tax would be levied on IUP holders or Izin Usaha Pertambangan and not on Coal Contract of Works or CCoW holders. Holders of Coal Contract of Works are exempted from this new tax. However CCoW holders are dominating Indonesian coal industry or approximately 75% of coal output is coming from those big scale miners in Indonesia.
It would be nice to see coal prices settle at a point where both the producer and consumer can sustain. Will it happen any time soon……..?
Click here for full details of Indonesian coal price reference since January 2009.(cs).
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Friday, 28 August 15
DRY BULK SHIP OWNER OPTIMISTIC ABOUT FUTURE PROSPECTS OF THE MARKET: NIKOS ROUSSANOGLOU, HELLENIC SHIPPING NEWS
Dry bulk ship owner Golden Ocean appeared optimistic on the long term prospects of the dry bulk market, mainly thanks to an expected resolution of ...
Friday, 28 August 15
COAL PRODUCTION IN THE U.S. FOR THE WEEK ENDING AUGUST 22 ROSE FOR THE THIRD STRAIGHT WEEK
COALspot.com – United States the world’s second largest coal producer has produced approximately totaled an estimated 18.5 million shor ...
Friday, 28 August 15
BANPU STRENGTHENS GROWTH PLAN
Coal Business: Asia-Pacific Synergies Increase Competitiveness for Premium Export Market.
Banpu Public Company Limited (BANPU) strengthens its ...
Thursday, 27 August 15
RATES FOR CAPES REMAINED ON A FREE FALL LAST WEEK - INTERMODAL
COALspot.com: Keeping everyone on their toes with the volatility seen in August, the Dry Bulk market undoubtedly remains a steady provider of chall ...
Wednesday, 26 August 15
MARKET INSIGHT - STRATOS TINIAKOS
It’s always interesting to comment on the market when big economies around the world are facing troubling times. Following the collapse of th ...
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- Star Paper Mills Limited - India
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- MS Steel International - UAE
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- Krishnapatnam Port Company Ltd. - India
- Kideco Jaya Agung - Indonesia
- Romanian Commodities Exchange
- Salva Resources Pvt Ltd - India
- Directorate General of MIneral and Coal - Indonesia
- Sarangani Energy Corporation, Philippines
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- Coal and Oil Company - UAE
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- Siam City Cement PLC, Thailand
- Posco Energy - South Korea
- GMR Energy Limited - India
- SMC Global Power, Philippines
- Grasim Industreis Ltd - India
- Georgia Ports Authority, United States
- Indian Oil Corporation Limited
- Thiess Contractors Indonesia
- Lanco Infratech Ltd - India
- New Zealand Coal & Carbon
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- Maharashtra Electricity Regulatory Commission - India
- Ind-Barath Power Infra Limited - India
- Electricity Authority, New Zealand
- Singapore Mercantile Exchange
- PowerSource Philippines DevCo
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- Gujarat Sidhee Cement - India
- Filglen & Citicon Mining (HK) Ltd - Hong Kong
- Ministry of Finance - Indonesia
- Bukit Makmur.PT - Indonesia
- Indika Energy - Indonesia
- IHS Mccloskey Coal Group - USA
- Kalimantan Lumbung Energi - Indonesia
- Gujarat Electricity Regulatory Commission - India
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- Oldendorff Carriers - Singapore
- Chettinad Cement Corporation Ltd - India
- Indian Energy Exchange, India
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- Mercuria Energy - Indonesia
- Port Waratah Coal Services - Australia
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- Cigading International Bulk Terminal - Indonesia
- India Bulls Power Limited - India
- Ministry of Mines - Canada
- Leighton Contractors Pty Ltd - Australia
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- International Coal Ventures Pvt Ltd - India
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- Indonesian Coal Mining Association
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- Standard Chartered Bank - UAE
- Mintek Dendrill Indonesia
- Orica Mining Services - Indonesia
- Orica Australia Pty. Ltd.
- PTC India Limited - India
- Australian Coal Association
- Ceylon Electricity Board - Sri Lanka
- Independent Power Producers Association of India
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- Indo Tambangraya Megah - Indonesia
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- Australian Commodity Traders Exchange
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- Indogreen Group - Indonesia
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- McConnell Dowell - Australia
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- Bangladesh Power Developement Board
- Trasteel International SA, Italy
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- Petron Corporation, Philippines
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- Bhoruka Overseas - Indonesia
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- Straits Asia Resources Limited - Singapore
- Agrawal Coal Company - India
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- Minerals Council of Australia
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