Indonesian government has issued 49 implementing regulations under Omnibus Law Number 11 of 2020 on Job Creation, one of which is in the energy sector - Photo: Special

JAKARTA (TheInsiderStories) – High global stock and the pandemic bringing down Indonesia’ coal prices in the last five months. Based on the energy and mineral resources (EMR) ministry data, in August, the average prices pegged to US$50.34 per metric ton (MT) of coal, dropped 3.49 percent compared to July a $52.16 per MT of coal.

“The decline in August due to the COVID-19 which has resulted in falling demand in several coal importing countries, while coal stocks in the global market have also increased,” said the ministry on Wednesday (08/05).

The decline in global coal prices was also triggered by the policies of China and India which prioritized the use of coal produced domestically, said the ministry. Indonesian official sees the domestic coal price will be lowering to $59 a MT of coal until the end of 2020 caused of various factors.

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

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.

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