Price Drops, Coal Predicted to Plummets Further



Mahinda Arkyasa

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  • TEMPO.CO, Jakarta - Indonesian coal commodity is predicted to drop in the second quarter of 2020. The main cause of the drop is the further decrease in coal reference price to USD 61.11 per ton.

    Previously in January 2020, the coal reference price is set at USD 65.93 per ton, which is lower from the USD 66.30 per ton in December 2019. The price increase to USD 66.89 per ton in February 2020 and further up to a level of USD 67.08 per ton in March 2020. However, the price drops to USD 65.77 per ton in April 2020.

    Chairman of the Indonesian Mining and Energy Forum (IMEF) Singgih Widagdo, said that coal price will continue to deteriorate. Pressure towards the sector will continue in Q2 od 2020 as the industry and power plant sector experienced a slow down as export destination countries decrease their energy consumption by around 10 to 20 percent.

    "Except for Japan, which reduction is relatively small," Singgih said as quoted by Bisnis on Wednesday, May 6, 2020.

    Singgih asserted that the pressure on coal export will certainly affect price index, including the coal reference price.

    "Observing the effects of the Covid-19 is still happening and India as the prospect of coal market is still in lockdown until today. Their industrial index is falling sharply, it is clear that in the second quarter, I see that we will be faced with huge pressure compared to the first quarter," Singgih said.

    Singgih asserted that exports will remain open despite the major pressure on prices. Moreover, Australia has shown no intention to lower production volume. With a relatively similar export market zone, such conditions will impact the Indonesian coal market, which will continue to be suppressed.

    Singgih said the government role is required in the middle of limited export, low demands, and low prices.

    "A tax stimulus may not be able to defend against market pressure, moreover, tax issues are related to end of year calculation," Singgih said.