Chinese Demand for Coal Increases, HBA Breaks USD 161.63 per Ton

The Reference Coal Price (HBA) rose again to reach USD 161.63 per ton in October 2021. This increase was due to the increasing demand for coal from China for power generation purposes.

“The increase in HBA in October 2021 was due to the continued increase in demand in China where currently the demand for coal is increasing for power generation purposes which exceeds the domestic coal supply capacity,” said Head of the Communications Bureau of Public Information Services and Cooperation of the Ministry of Energy and Mineral Resources, Agung Pribadi in Jakarta, Tuesday 5 October.

This fantastic increase, said Agung, was also influenced by the large demand from South Korea and European countries in line with rising natural gas prices.

Agung said the above factors were the reason for the increase in global coal prices this October. Whereas the previous HBA had also recorded the highest figure in the last decade, namely USD150.03 per ton.

“(HBA) rose again, up USD 11.60 per ton this month compared to the previous one,” he said.

In February-April 2021, HBA had a downward trend. Then it experienced consecutive increases in the May-September 2021 period. The increases continued until October 2021 and recorded a new record high.

For information, HBA is the price obtained from the average of Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt’s 5900 in the previous month, with quality equivalent to 6322 kcal/kg calories. GAR, Total Moisture 8%, Total Sulfur 0.8%, and Ash 15%.

There are two derivative factors that affect the movement of HBA, namely supply and demand. In terms of supply derivatives, it is influenced by season (weather), mining techniques, supplier country policies, to supply chain technicalities such as trains, barges, and loading terminals.

Meanwhile, the demand derivative factor is influenced by declining electricity demand, which correlates with industrial conditions, import policies, and competition with other energy commodities, such as LNG, nuclear, and hydro.