Indonesia’s move to control coal prices faces Chinese pushback
The Indonesian government’s plan to regulate the price of coal exports is facing pushback from its largest customer, as firms in China balk at paying higher costs as other suppliers lower their rates.
Indonesian Energy Minister Bahlil Lahadalia this week issued a regulation forcing coal exporters from March 1 to use the official pricing standard, or Harga Batubara Acuan. The intention is to wrest control from independent pricing agencies that have lowered rates considerably compared to the Indonesian benchmark, Lahadalia said earlier this month.
For example, the February HBA for high-quality Indonesian coal was $124.24 a ton, compared to Australia’s Newcastle coal futures on the ICE Futures Europe exchange, where the February contract averaged $105 a ton this month and traded at $102.40 on Thursday.
Indonesia is the world’s largest coal exporter and China, the top importer, is its biggest market. Buyers there have balked at Indonesia’s move, as years of high domestic production and imports, combined with soft demand over the winter, have left many with overflowing stockpiles. At least one major coal buyer has halted spot imports of foreign fuel as it tries to bring inventories down.
If the new policy significantly raises prices, it could wipe out trade profits and discourage purchases from Chinese buyers, the China Coal Transportation and Distribution Association in a note earlier this week. Some Chinese firms may seek to cancel or renegotiate existing long-term contracts because of the shift, China-based consultancy Fenwei Energy Information Service Co. said in a separate note Thursday.
One problem is that coal prices change frequently, but the HBA updates just once a month. Indonesia is trying to reduce the lag by changing that schedule, updating on the 1st and 15th of every month going forward, according to the government regulation.
Comments
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation