COALspot.com: Indonesian Coal Price Reference reached another record high in October as Russia's war in Ukraine continues to spark a surge in coal demand and price
The Indonesian Coal Price Reference hits $330.97 this month, according to data from the Ministry of Energy and Mineral Resources of the Republic of Indonesia. That's the highest ever, surpassing the previous record high of $323.91 a ton set in June 2022.
A year ago, The Indonesian Coal Price Reference was at just $161.63 a ton, according to MEMR. Indonesian Coal Price Reference for October delivery surge 3.68 per cent month on month. The Indonesian Coal Price Reference jump by US$ 11.75 per ton of 6322 GAR coal in October compared to September Price.
Rebounding electricity demand post Covid-19 and Russia - Ukraine crisis have driven up the thermal coal prices for last few months or since January 2022, and currently making thermal coal one of the best-performing fuel along with other Fossil Fuel.
Since the September 2020, the price of 6322 GAR coal - the benchmark for the Indonesian Coal Price Reference - has rose 569.71%
This month's Indonesia coal price reference which was calculated based on average of September 2022 Index of four international coal indices has increased 3.68% month on month.
The selling price of coal for the domestic power plants, which is supplying power to state-owned electricity company (Perusahaan Listrik Negara (PLN), is still capped at $70 per Ton for October 2022 delivery basis 6322 GAR. In the meantime, the selling price of coal for the other domestic Industries except smelter, is also capped at $90 per Ton.
Y-O-Y : Up US$ 169.34 | 104.77%
Y-T-M : Up US$ 172.47 | 108.81%
M-O-M : Up US$ 11.75 | 3.68%
The declared Indonesian thermal coal price reference for October 2022 delivery is 545.93% higher compared to that in September 2020 price.
An increase or decrease in four coal indices such as Indonesia Coal Index (ICI), Platts-5900, Newcastle Export Index (NEX) and Global coal Newcastle Index (GCNC) will cause an increase or decrease in Indonesian coal price reference every month, as HBA is linked to those coal indices.
The coal price reference in Indonesia was 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 declared Indonesia thermal coal reference price (or called HBA) for September 2020 was the lowest in 166 months and October 2022 price is the highest or since launching of HBA by the government of Indonesia. The royalties and taxes will be calculated based on this declared HPB.
Indonesian coal benchmark price for October 2022 was calculated based on calorific value of 6,322 kcal/kg (GAR), stated to be using a formula based on the September 2022 index average of ICI-1 (Indonesia Coal Index) 25 per cent, Platts-5900 25 per cent, NEX (Newcastle Export Index) 25 per cent, and GC (globalCoal Index) 25 per cent 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 October 2022 or until publish an new Coal Price Reference (HBA).
The government of Indonesia is publishing a monthly coal price reference (HBA & HPB) since February 2009 to be used by coal producers for all spot as well as term contracts.
However, the official implementation of HBA was commenced since September 2011 and 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 this month is valid for the spot price (loading on or before 31 October 2022 or until issuing a new HBA), while (as per previous HBA note) 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. (A 50 per cent of latest month's HPB (the current month), a 30% one-month prior HPB and a 20% of two-month prior HPB). However, according to market players, currently any coal supplied within this month should be referred to October 2022 HBA for royalty as well as corporate tax instead of the contract price that agreed between buyer and seller.
The government is used to declare the price marker for eight brands of Indonesia's coal, which were most commonly traded in the market. Those eight brands act as the benchmark and used to calculate other 69 coal types with a quality similar to the coal price markers. However, this time, the government was issued price for HBA and no HPB prices was published.
COALspot.com, used its own calculator which is developed based on HBA/HPB formula and terms and condition declared by DGoMC to calculate HPB prices for eight major brands and for other types of coals. The government has stopped declaring formulas or methodologies that used to calculate either HBA or HPB. COALspot.com now publishing HPB and other coal prices based on HBA declared in this month.
Click here for details of Indonesian coal price reference since January 2009.(cs).
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