Jakarta (Indonesia Window) – The electricity crisis that hits India as a result of the heat wave has increased the demand for coal from Indonesia, bringing the benchmark coal price in June to 323.91 U.S. dollars per ton.

The June’s benchmark coal price rises 17 percent or 48.27 dollars per ton from that in May which was set at 275.64 dollars per ton.

"The Indian government has increased the number of coal imports due to the tight supply of coal from domestic producers for its power plants," the Indonesian Ministry of Energy and Mineral Resources’ spokesperson Agung Pribadi said here on Saturday (June 4).

The benchmark coal price, he added, was also influenced by China's coal demand. "Their demands have also increased because their steam power plants have begun to accumulate coal stocks for the fall. In addition, there is a policy of eliminating coal import taxes in China for the next nine months," Agung explained.

Meanwhile, European geopolitical conditions due to the conflict between Russia and Ukraine were also a factor influencing the benchmark coal price when the European Union issued a policy to stop coal imports from Russia starting next August.

"Buyers from Europe are starting to actively seek coal supplies from Asia," said Agung.

He described, over the past six months, the benchmark coal price chart continued to climb for five months in a row. In January 2022 the benchmark coal price was recorded at 158.50 dollars per ton, then rose to 188.38 per ton in February. Furthermore, in March the price touched 203.69 dollars per ton, in April at 288.40 dollars per ton, and in May at the level of 275.64 dollars.

The June benchmark coal price will be used directly in the sale and purchase of coal commodities (spot) for one month at the point of sale delivery on a Free On Board basis on a transport vessel (FOB Vessel).

The benchmark coal price is the price obtained from the average index of 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 calories, total moisture 8 percent, total sulfur 0.8 percent, and ash 15 percent.

The government has also set a domestic benchmark coal price specifically for electricity at 70 dollars per ton, and 90 dollars per ton for cement and fertilizer industries.

"This is to maintain the competitiveness of the domestic industry and to ensure the affordability of industrial productions for people," Agung said.

Reporting by Indonesia Window