Indonesia’s Ministry of Energy and Mineral Resources said India’s growing electricity consumption amid soaring summer temperatures is one of the factors affecting coal prices, which have risen 17% month over month in June.

“Rising electricity consumption in India due to the heat wave has also boosted demand for coal in Indonesia. As a result, the benchmark coal price (HBA) in June increased by 17%, or $48.27 per ton, to $323.91 per ton compared to May,” the Indonesian ministry said. The statement was published in Bahasa Indonesia and translated into English using Google Translate.

“The Indian government has increased the number of coal imports due to tight supply from domestic producers for power plants,” said Agung Pribadi, head of communications, public information services and the Cooperation Office ( KLIK) of the Ministry of Energy and Mineral Resources. Besides India, prices were influenced by China. Another factor is the geopolitical situation in Europe due to the Russian-Ukrainian conflict. The European Union has issued a policy to halt Russian coal imports from August and European buyers are actively seeking supplies of Asian coal, he added.

Coal demand

A senior executive from a state-owned generation company (Genco) said, “Indonesian coal prices have strengthened due to growing demand from India and Europe. Some Indian import deals are expected to be signed in the coming week and this is (Indonesia) one of the countries”.

In addition, Australia faces friction due to soaring gas prices, which increases costs. This could increase the use of coal for power generation as it is the cheapest source, the official explained.

Harga Batubara Acuan (HBA) has been on the rise since the start of 2022. In January, prices were at $158.50 per ton, rising to $188.38 in February, then to $203.69 per ton in March. They rose again in April to reach $288.40, then $275.64 per ton in May.

Coal imports

For FY23, India is expected to import around 59 million tonnes (mt) of coal for blending in power plants, while for June inbound shipments are expected to be between 4.8 and 5 mt.

Earlier this week, state mining company Coal India (CIL) launched a global tender to import 2.42 tonnes of the key commodity for July-September FY23. This was done within the week following receipt of indentations from seven state gencos and 19 independent power plants (IPP). In total, until July 2023, CIL must import around 12 tonnes of coal.

Coal imports, which peaked at 248 tonnes in FY20, fell to 215 tonnes in FY21 and 209 tonnes in FY22. The decline in FY22 was largely due to lower electricity sector imports, which fell from 69 mt in FY20 to 45 mt in FY21 and then lower in south at 27 mt during the EX22.

On May 18, the Department of Energy ordered Gencos, including states and IPPs, to begin importing by May 31 and if shipments do not arrive at power plants by June 15 , the defaulter will have to increase imports to 15%. In addition, if the blend of domestic and imported coal is not launched by June 15, the defaulter’s domestic allocation will be reduced by 5%.

Published on

June 12, 2022