Indonesia's thermal coal price (in Indonesian: Harga Batubara Acuan, abbreviated HBA), a monthly price set by Indonesia's Energy and Mineral Resource Ministry and based on both domestic and global coal prices, rose 9.5 percent month-on-month (m/m) to USD $63.93 metric tons in September 2016, extending the recent rally and touching its highest level since April 2015.

However, DBS sees few reasons for medium term or long-term price growth as the recent rally is primarily caused by concerns about a sudden drop in the local coal supply of China. China's authorities decided to cut local coal production by 550 million tons, or about 15 percent.

In a recent report DBS Group Research stated that coal prices are expected to remain in the range of USD $60 - $65 per metric ton as China is eager to cut coal consumption. Given that around half of China's power plants are coal-fired ones, while development of power plants that use environmentally friendly resources goes slow,  this transition will require a long time.

On the other hand, India is expected to show more demand for coal in the period ahead as the nation is eager to raise its electrification ratio. Coal is regarded the most efficient solution. Therefore, DSB Group Research sees coal consumption of India rise by 2.8 percent per year in the period ahead.

Indonesian Government's Benchmark Thermal Coal Price (HBA):

Month    2012    2013    2014    2015
   2016
January   109.29    87.55    81.90    63.84    53.20
February   111.58    88.35    80.44    62.92    50.92
March   112.87    90.09    77.01    67.76    51.62
April   105.61    88.56    74.81    64.48    52.32
May   102.12    85.33    73.60    61.08    51.20
June    96.65    84.87    73.64    59.59    51.87
July    87.56    81.69    72.45    59.16    53.00
August    84.65    76.70    70.29    59.14    58.37
September    86.21    76.89    69.69    58.21    63.93
October    86.04    76.61    67.26    57.39
November    81.44    78.13    65.70    54.43
December    81.75    80.31    69.23    53.51

in USD/ton
Source: Ministry of Energy and Mineral Resources

Indonesian Production, Export, Consumption & Price of Coal:

  2007 2008 2009 2010 2011 2012 2013 2014 2015
Production
(in million tons)
 217  240  254  275  353  412  474  458  461
Export
(in million tons)
 163  191  198  210  287  345  402  382  366
Domestic
(in million tons)
  61   49   56   65   66   67   72   76   87
Price (HBA)
(in USD/ton)
  n.a   n.a  70.7  91.7 118.4  95.5  82.9  72.6  60.1

Sources: Indonesian Coal Mining Association (APBI) & Ministry of Energy and Mineral Resources

Bahas