The government has lowered its thermal coal reference price at US$65.93 a ton in January - Photo: Privacy.

JAKARTA (TheInsiderStories) – The government has lowered its thermal coal reference price at US$65.93 a ton in January, down 0.55 percent from $66.30 a ton in the previous month, the energy and mineral resources ministry has announced on Wednesday (01/08). The price also lowered 28.70 percent from $92.41 a ton set in January 2019.

“The lowered price was due to the decline in coal import performance in importing countries, especially in the Asian region such as China, India, Japan, and South Korea,” said ministry spokesman, Agung Pribadi, adding the tightened Chinese import restrictions have limited any potential upside to seaborne thermal coal demand in winter.

The coal price will be used for direct sales (spot) for one month at the point of sale for Free on Board on a transport vessel (FOB Vessel), according to Pribadi.

The thermal coal reference price is a monthly average price based 25 percent each on Platts Kalimantan 5,900 kcal/kg GAR assessments, Argus-Indonesia Coal Index 1 (6,500 kcal/kg GAR), Newcastle Export Index (6,322 kcal/kg GAR) and globalCOAL Newcastle (6,000 kcal/kg NAR).

In December, the daily Platts FOB Kalimantan 5,900 kcal/kg GAR coal assessment averaged $60.33 a ton, up from $60.17 a ton in November, according to the ministry data.

The price for thermal coal is the basis for determining the prices of 77 Indonesian coal products and for calculating the royalty amount producers have to pay for each metric ton of coal sold. It is based on 6,322 kcal/kg GAR coal with 8 percent total moisture content, 15 percent ash as received and 0.8 percent sulfur as received.

According to the ministry data, at the end of 2019, coal prices had edged up 0.045 percent from November to December. However, on an annual basis, the average price of coal has decreased. The ministry noted that from January to December 2019 it only reached $77.89 a ton, more mini than the average price in 2017 which was $ 85.92 a ton, and in 2018 which reached $ 98.96 a ton.

Since September 2018, coal prices trend has indeed been depressed. Even the October benchmark price has been the lowest in the last three years. Since September 2018, the reference price has almost always declined and only recorded a slight increase three times on a monthly basis in August, November, and December.

Written by Lexy Nantu, Email: lexy@theinsiderstories.com