European energy crisis triggers domestic coal price spike: officials

Jakarta – The energy crisis in Europe has triggered a doubling of domestic coal prices, officials said Tuesday (2/8). Compared to January of this year, the reference coal price (HBA) at USD 158.50 per ton, increased to USD 321.59 per ton in August.

Head of the Bureau of Communication, Public Information Services, and Cooperation of the Ministry of Energy and Mineral Resources (ESDM), Agung Pribadi in a written release, said that the condition of gas supply in Europe has a major influence in determining this month’s HBA. The price rose USD 2.59 compared to the previous month.

“The price of liquefied natural gas in Europe continues to climb, following the uncertainty of gas supply. In fact, several European countries have reactivated their coal-fired power plants to anticipate the electricity crisis,” he said.

HBA is obtained from the average of a number of indices, namely the Indonesia Coal Index (ICI), Newcastle Export Index (NEX), Globalcoal Newcastle Index (GCNC), and Platt’s 5900 in the previous month. Meanwhile, the quality is equivalent to 6,322 kcal/kg GAR calories, 8 percent total moisture, 0.8 percent total sulfur, and 15 percent ash.

In addition, another factor that influenced the increase in HBA was the surge in demand from China, India, and South Korea, since Russia offers a discount on coal prices. The increase in coal prices has been consistent throughout this year. In January, for example, the price was still in the range of USD 158.50 per ton. Then, it rose to USD 188.38 per ton in February.

In March it touched the price level of USD 203.69 per ton. The following April and May at USD 288.40 and USD 275.64 per tonne, respectively. Meanwhile, in June, the reference coal price penetrated USD 323.91.

“Even though in July it decreased slightly to USD 319 per tonne,” Pribadi said, adding that in July, the NEX index rose 3.75 percent, GCNC rose 3.32 percent, ICI fell 3.94 percent, and Platt’s fell 3.58 percent.

He continued that there are derivative factors that affect the movement of the reference coal price, namely supply and demand. Supply is influenced by weather, mining techniques, supplier country policies, and supply chain techniques, such as trains, barges, and loading terminals.

Meanwhile, the demand factor is influenced by declining electricity demand in correlation with industrial conditions, import policies, and competition with other energy commodities, such as LNG, nuclear, and hydro. Meanwhile, the HBA for domestic electricity needs is USD 70 per ton and USD 90 per ton for domestic industrial fuel needs. (Hartatik)

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