Indonesian coal commodities are projected to decline in the second quarter of 2020. The key cause of the fall is the further decrease of the coal reference price to USD 61.11 per ton.
Previously, in January 2020, the coal reference price was set at USD 65.93 per ton, which is lower than USD 66.30 per ton in December 2019. The price increased to USD 66.89 per ton in February 2020 and to USD 67.08 per ton in March 2020. Nonetheless, the price will fall to USD 65.77 per ton in April 2020.
Singgih Widagdo, Chairman of the Indonesian Mining and Energy Forum (IMEF), said that the prices of coal will continue to deteriorate. Pressure against the sector will continue in Q2 2020 as the industry and the power plant sector have slowed down as export destination countries reduce their energy consumption by about 10 to 20 per cent.
"Except for Japan, which reduction is relatively small," Singgih said as quoted by Bisnis on Wednesday, May 6, 2020.
Singgih argued that the pressure on the export of coal would certainly have an impact on the price index, including the coal reference price.
"Observing the effects of the Covid-19 is still happening and India as the prospect of the 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 argued that exports would remain open despite major price pressures. In addition , Australia has shown no intention of lowering production volumes. With a relatively similar export market zone, such conditions will have an impact on the Indonesian coal market, which will continue to be suppressed.
Singgih said that the role of the government is needed in the midst of limited exports, low demand 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.
