COALspot.com: Indonesian coal benchmark price surges 0.86% in November compared to declared price in October, the latest ministerial decree showed.
The benchmark price of Indonesian thermal coal has increased US$0.81 per ton month on month to $94.80 per ton for November 2017 delivery.
The Minister of Energy and Mineral Resources Republic Indonesia had declared November 2017 HBA at US$94.80 per ton for 6322 GAR power plant coal by issuing a ministerial decree 3843 K / 32 / MEM / 2017 dated 2 November 2017 which was released on 16 November 2017.
The ministry has increased the monthly Indonesian thermal coal price reference for November delivery by 0.86% a ton compared to last month's declared HBA. In the meantime, the November 2017 HBA was 11.37% higher the comparable period in 2016.
According to details of HBA mentioned in previous months, an increase or decrease in four international 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 international coal indices. The ministerial decree 3843 K / 32 / MEM / 2017 dated 2 November 2017 have not given any details about formation of HBA/HPB.
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 February 2016 was the lowest in 107 months or since launching of HBA by the government of Indonesia. The royalties and taxes will be calculated based on this declared HPB. Interestingly, the highest monthly average price occurred in February 2011, while the lowest coal price also occurred in February 2016.
Indonesian coal benchmark price for November 2017 was calculated based on calorific value of 6,322 kcal/kg (GAR), stated to be using a formula based on the October 2017 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 – 30 November 2017.
The highest benchmark price was declared by the Ministry of Energy & Mineral Resources of Indonesia in February 2011, and this month’s declared price is around US$ 32.25 a ton or 25.38% lower compared to Feb’ 11 benchmark price. In the meantime, this month’s declared price was around US$ 43.88 a ton or 86.17% higher compared to Feb’ 16 benchmark price, which was the lowest price ever declared by DGoMC.
The government of Indonesia was publishing a monthly coal price reference (HBA & HPB) since February 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 30 November 2017), 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. (50% of the latest available month's HPB (this month) 30% one-month prior HPB and 20% of two-month prior HPB).
The government used to declaring 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, has utilized its calculator which was developed based on HBA formula and terms and condition to calculate price for eight major brands and HPB for other types of coal.
Click here for full details of Indonesian coal price reference since January 2009.(cs)
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