June 2, 2025
JAKARTA – Indonesian coal exports dropped 6.43 percent to 160 million tonnes in the January-April period of 2025, according to data from the Energy and Mineral Resources Ministry.
Surya Herjuna, the ministry’s coal business development director, denied that high reference prices were to blame, but traders warned that misaligned pricing indices could further erode global demand as thermal coal prices hit four-year lows.
Surya said the declining exports were caused partly by geopolitical tensions, which have dampened demand from key buyers, especially China and India, the two most populous countries.
“Due to the trade war, production activity in both countries has slowed,” he said during a discussion in Jakarta on Wednesday, as Bisnis reported.
Chinese customs reported a 20 percent year-on-year (yoy) decline in April.
Some buyers have cited Indonesia’s reference coal price (HBA) as a possible deterrent, arguing it was higher than global market rates.
Read also: Govt’s bid to hike coal export prices faces global market backlash
Surya denied that claim, noting that domestic coal sales had also dropped to 12 million tonnes in the first quarter from 16 million tonnes a year prior.
Asia’s seaborne thermal coal prices have dropped to their lowest levels in four years, driven by reduced imports from major buyers China, India and Japan, Reuters reported on May 6.
Prices for key thermal coal grades from top exporters Indonesia and Australia have been steadily declining since October and have fallen more sharply in recent weeks amid weakening demand.
“In my opinion, if we talk about the HBA [as the reason for the decline], it’s not [quite] right, because [sales under] the domestic market obligation (DMO) have also declined,” Surya was quoted as saying by Bisnis.
A group of energy traders responsible for over 10 percent of Indonesian thermal coal exports are urging for a replacement of the local pricing index, arguing that it inflated prices, putting them above market levels, Bloomberg reported on May 27.
Bloomberg quoted senior executives from four commodity trading firms, who requested anonymity due to the sensitivity of the issue, saying the Coalindo Index had been out of sync with other market benchmarks for months.
They also warned that continued use of the index could reduce international demand for Indonesian coal.
The Coalindo Index comprises half of the Indonesian Coal Index.
The HBA pricing requirement for coal exports officially took effect on March 1 this year, in a move meant to prevent Indonesian coal from being sold abroad at prices below the local benchmark.
Most coal exporters would need to immediately renegotiate the contracts to avoid extra costs from rising royalties because of a disparity between the Indonesian Coal Index (ICI) price, which has often been used as the reference price by Indonesian exporters in the past, and the HBA.
Prices offered by Indonesian exporters often take cues from the ICI, which tracks a range of Indonesian coal types. However, the ICI price is often below international coal indices, partly because a significant portion of Indonesia’s coal has lower calorific value than coal assessed in international benchmarks, such as the ICE Newcastle.