India Power Crisis, June HBA Breaks USD323.91 per Ton

The electricity crisis that hit India due to the heat wave has also increased the demand for Indonesian coal. As a result, the Reference Coal Price (HBA) in June 2022 rose 17% or USD48.27 per tonne to USD323.91 per tonne from May, which was USD275.64 per tonne.

“The Indian government has increased the number of coal imports due to the tight supply of coal from domestic producers for power plants,” said Head of the Communications, Public Information Services and Cooperation Bureau (KLIK) of the Ministry of Energy and Mineral Resources Agung Pribadi in his statement, quoted on Monday (6/06).

Apart from India, continued Agung, the value of HBA is also still influenced by the condition of China’s coal demand. It is known, this bamboo curtain country bought up coal on a large scale from outside because it was not subject to import taxes for the next 9 months.

“Their demand has also increased because the PLTU there is starting to accumulate coal stocks for the fall. Moreover, there is a policy of eliminating coal import taxes in China for the next 9 months,” he explained.

Another important factor is the geopolitical condition of Europe as a result of the Russia-Ukraine conflict. The European Union issued a policy to stop imports of coal from Russia effective from next August. “Buyers from Europe are starting to actively seek coal supplies from Asia,” said Agung.

Agung explained that during the last six months, the HBA chart continued to climb. Starting from January 2022 at USD158.50/ton, rose to USD188.38/ton in February. Furthermore, March touched the figure of USD203.69/ton, April was at USD288.40/ton, and lastly in May it was at the level of USD275.64/ton.

“This June HBA will be used directly in the sale and purchase of coal commodities (spot) for one month at the point of delivery of sales on a Free on Board basis on a transport vessel (FOB Veseel),” he said.

HBA itself is a price obtained from the average index of the 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 GAR. , Total Moisture 8%, Total Sulfur 0.8%, and Ash 15%.

There are two derivative factors that influence 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 derivative demand factor is influenced by falling electricity demand, which correlates with industrial conditions, import policies, and competition with other energy commodities, such as LNG, nuclear, and hydro.

In addition, the government also set a domestic HBA specifically for electricity at USD70 per tonne and USD90 per ton for domestic HBA for the fuel needs of the cement and fertilizer industries. “This maintains the competitiveness of the domestic industry and mainly ensures the affordability of industrial production for the community,” concluded Agung. 

Source: https://www.tambang.co.id/india-krisis-listrik-hba-juni-tembus-usd32391-per-ton