Indonesian official sees the domestic coal price will be lowering to US$59 a metric ton of coal until the end of 2020 caused of various factors, especially the impact of COVID-19 outbreak - Photo by Renuka Coalindo

JAKARTA (TheInsiderStories) – Indonesian official sees the domestic coal price will be lowering to US$59 a metric ton of coal until the end of 2020 caused of various factors, especially the impact of COVID-19 outbreak. This month, the reference prices for export was $52.98 per MT of coal from during 2019 the average price was at $77.89 a MT of coal.

Since January, the benchmark price was fluctuated at $65.93 per MT of coal, dropped compared to December 2019 of $66.30 per MT of coal. Then rose again in February to $66.89 a MT of coal, March at $67.08 per MT of coal, April rebounded to $65.77 a MT of coal, and lowered to $61.11 per MT of coal in May.

According to director at energy and mineral resources (EMR) ministry, Johnson Pakpahan, the price of coal was under pressure caused the oversupply condition amid the epidemic in the global market. While, chairman of the Indonesian Mining Institute Irwandy Arif as quoted by Bisnis, predicted that coal prices will move in the range $60 to $80 per MT of coal during 2020.

Then, chairman of the Indonesian Mining Experts Association Rizal Kasli told Kontan, the production and sales in the second half of this year will slightly increase to $65 a MT of Coal. The reasoned, the producers its estimating to slice up to 70 Mt of coal from the initial targets of 550 MT of coal.

While, executive director of the Indonesian Coal Mining Association Hendra Sinadia rated, in the second quarter, especially in May, the coal output were still oversupply due to the sharp decline in demand in China and India.

The Chinese coal mining association also predicted demand in the second quarter would decline after a correction of around 6.8 percent in the first quarter of this year caused the impact of the COVID-19. Indian market still sluggish in the remaining until June 2020.

Last April, the EMR ministry sees the domestic coal demand could fall around 5 percent if the COVID-19 impact hit by the global prices prolonged. This year, the government has targeted 155 million tons (MT) of coal sales for domestic market obligation (DMO) ini this year.

But, the government is optimistic that all domestic needs will be met from national production, despite a decline in demand as a result of slowing industrial operations due to the global pandemic. Based on the ministry data, the realization of DMO reached 31.53 MT of coal or 20 percent of the 2020′ targets.

It said, total national production in the first quarter amounting to 143 million tons. The DMO realization for stated-owned power producer, PT Perusahaan Listrik Negara recorded 25.6 MT of coal. The domestic coal needs for the general non-electricity sector reached 5.93 MT.

Even so, the government continues to ensure that coal demand for various domestic industries can be met from domestic production, even in the midst of a pandemic. This is because coal production is still in accordance with the established plan so that supply is maintained.

EMR ministry has urged the coal producer to prioritize the fulfillment of domestic primary energy needs to support the government’ renewable program. Until October of 2019,  the realization of domestic coal utilization was only 95 MT from the target 128 MT.

The minister, Arifin Tasrif, also decided to continue the DMO of at least 25 percent of the coal production in 2020. These provisions are contained in Ministerial Decree Number 261 of 2019 concerning Fulfillment of Domestic Coal Needs for 2020.

Written by Staff Editor, Email: theinsiderstories@gmail.com