Source: The Ministry of Energy and Mineral Resources of the Republic of Indonesia 

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The circumstance that surrounds the gas supply in Europe has had a significant effect on the Indonesian Reference Coal Price (HBA) in August 2022 of US$2.59 per ton from the previous month. Thus, the HBA in August 2022 reached $321.59 per ton.

European gas supply condition has had a significant effect on the Reference Coal Price (HBA) in August 2022 of US$2.59 per ton from the previous month. Thus, the HBA in August 2022 reached $321.59 per ton. 

"The price of liquefied natural gas in Europe continues to climb following the uncertainty of gas supply. Some European countries have even reactivated coal power plants in anticipation of an electricity crisis," said the Head of the Communications, Public Information and Cooperation Bureau (KLIK) at the Ministry of Energy and Mineral Resources, Agung Pribadi, in Jakarta, Monday (January 8, 2022). 

Another factor that also played a significant role, continued Mr. Pribadi, was the surge in coal demand from China, India, and South Korea. "This is because Russia has been offering discounts on coal prices," he said. 

This increase resulted in a positive trend in coal prices throughout 2022. In January 2022, the HBA was $158.50/ton, which increased to $188.38/ton in the following month. Then, the price reached $203.69/ton in March, $288.40/ton in April, $275.64/ton in May, and $323.91/Ton in June. "In July the value dropped to $319/ton. Then it increased again in August 2022 to $321.59/ton," said Mr. Pribadi. 

HBA itself is a price obtained from the average index price of the previous month of the Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platts 5900, with coal quality equivalent to 6322 kcal/kg GAR calories, 8% of total moisture, 0.8% total sulfur, and 15% ash. 

Mr. Pribadi added that the HBA increase in August was also influenced by changes in the average monthly index that composes it, namely: 3.75% increase in NEX, 3.32% increase in GCNC, 3.94% decrease in ICI, and 3.58% decrease in Platt’s. For the record, two derivative factors affect the movement of HBA, namely supply and demand. In terms of supply derivatives, it is influenced by season (weather), mining techniques, supplier country policies, and supply chain technicalities such as trains, barges, and loading terminals.  

Meanwhile, the demand derivative factor is influenced by declining electricity demand, which correlates with industrial conditions, import policies, and competition with other energy commodities, such as LNG, nuclear, and hydro. 

In addition, the government has also set a domestic HBA specifically for electricity at $70 per ton and $90 per ton for domestic HBA for industrial fuel needs. "This is to maintain the competitiveness of the domestic industry and to mainly ensure the affordability of industrial production for the public," concluded Mr. Pribadi.