Indonesia Raises Coal Price This Month

From Coal Guru

The Jakarta Globe reported that Indonesia’s benchmark coal price has recovered for the first time in three months in December in time with winter in southern hemisphere countries that are normally followed by an increase in demand.

According to data from the directorate general of coal and minerals at the Energy and Mineral Resources Ministry, the government’s benchmark price for this month was USD 81.75 per tonne slightly higher than the USD 81.44 per tonne in November. The increase was a reversal from a downward trend in Indonesia’s coal price since September. Still, the price for coal is 27% lower than the government’s benchmark price in December last year which stood at USD 112.67.

Indonesian coal miners have been experiencing difficult times this year. Years of strong demand from China and India, Indonesia’s two largest coal consumers have encouraged local producers to mine more coal and that has contributed to a global supply glut. The decline in coal’s price was worsened by the fact that the United States has been using a large amount of natural gas, pushing the country to ship coal to Asian markets.

Adding to price woes, state utility company Perusahaan Listrik Negara, which is the primary coal buyer in Indonesia, has secured enough coal for at least until 2015. Miners though are hoping that the coal price will pick up by cutting production.

Mr Bob Kamandanu the chairman of the Indonesian Coal Mining Association said last month that the coal business is going through what he classified as a process of natural selection and that is expected to reach an equilibrium level in the H1 of next year.

He said that there are many traders in the coal business and the price increase set by them was not consistent with real demand. Eventually in the process of natural selection miners will be separated from the traders and the mining companies will survive.

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