COALspot.com: The Indonesia Coal Benchmark Price declined in May 2016.
The Director General of Mineral and Coal of Indonesia, the regulator of Coal industry in Indonesia who has authority to declare monthly benchmark price for Indonesian thermal coal, decreased Indonesia coal benchmark price for May 2016. The Mineral and Coal department had declared May 2016 HBA at US$ 51.20 per ton for 6322 GAR power plant coal on 16 May 2016.
The May 2016 HBA dropped nearly 2.14% from last month and 16.18% the comparable period in 2015.
The May 2016 price reference for Indonesian coal down 2.14% or US$ 1.12 a ton from April 2016. The May Indonesia benchmark price for coal was off 16.18% from the May 2015 price of US$ 61.08 a ton. An increase or decrease in four international coal indices such as ICI-1, Platts-5900, NEX and GC will cause an increase or decrease in HBA every month, as HBA is linked to those 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.
According to the data from Director General shows that, the government has fixed US$ 12.65 a ton (down 2.17 per cent 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 May 2016 FOB vessel delivery. In the meantime, the government is also declared US$ 37.64 per ton as HPB for 5000 GAR coal with total moisture 22.40%, Ash 8.90% and Sulphur 0.54% for May 2016 deliveries.
The February 2016 Indonesia thermal coal reference price (or called HBA) was the lowest in 89 months or since launching of HBA by the government of Indonesia in January 2009. The royalty and taxes will be calculated based on this declared HPB.
Indonesian coal benchmark price for May 2016 was calculated based on calorific value of 6,322 kcal/kg (GAR), stated to be using a formula based on the April 2016 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 May 2016.
The highest benchmark price was declared by the Ministry of Energy & Mineral Resources of Indonesia in February 2011, around 5 years ago and this month declared price is around US$ 75.85 a ton or 59.70 per cent lower compared to Feb’ 11 benchmark price.
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 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.
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 February 2016 (US$ 50.92 / MT).
The declared HBA in this month is valid for the spot price (loading on or before 31 May 2016), 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 67 coal types with a quality similar to the coal price markers.
The excess of coal supplies and weak demand, fast developments of renewable energy and low oil & Gas prices are still to be blamed for obstacle of price recovery or the main reasons for falling of coal prices. According to small scale miners, today’s coal price levels were no more supporting any new investments or new explorations in coal mines. Some Indonesian big scale miners are increasing the production to keep their bottom line healthy while small scale miners either closing down the operation or downscale the operation to keep float at this difficult time. However some large scale coal miners in Indonesia has reduced their production in 2016.
Click here for full details of Indonesian coal price reference since January 2009.(cs).
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