Jakarta, CNBC Indonesia – The price of coal is like roller coaster in October. At the beginning of the month, coal continued to climb to break an all-time high, but after that it reversed to tens of percent, and was at its lowest level in almost 3 months.
The movement of coal this month is similar to bitcoin Cs, which has very high volatility, rose sharply and then reversed to double digit percentage.
According to Refinitiv data, the benchmark coal price at Ice Newcastle Australia for the next two-month contract fell 10.12% to US$ 154.9/ton on Friday (29/10) trading yesterday, Refinitiv data reported. This level is the lowest since August 5.
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Throughout this week, coal recorded a decline of almost 19%. Meanwhile, if we look at the all-time high of US$ 280/ton which was reached on 5 October, the price of coal has fallen more than 44%.
China, which continues to try to intervene in the coal market, has made its reference price even lower.
Coal is a strategic commodity for China, because about 60% of the power plants there use coal power. The high price of coal makes electricity companies dizzy because on the other hand the demand is also very high.
The Chinese government has given approval for 153 miners to increase production. The increase in production is expected to lower prices, and the impact has been seen recently.
Recently, China is rumored to be doing a direct intervention by setting a coal price target. Reuters reported the plan was disclosed at a meeting between the National Development and Reform Commission (NDRC) with coal miners, distributors and power generation companies on Tuesday and Wednesday this week.
Sources familiar with the matter said the Chinese government wanted to cap coal prices at 1,200 yuan per tonne (US$187.56/ton), well below the current range of 1,450 to 1,900 yuan per tonne. Even in the future it will be lowered again.
Analysts said prices at 1,200 yuan per tonne were still above the power plant break-even point of 600 to 1,000 yuan per tonne, depending on the region. Therefore, the NDRC is expected to continue to push down coal prices.
“Coal prices at 1,200 yuan per tonne became the NDRC’s first target, before continuing to lower, probably around 300 to 400 yuan again,” said the trader, who declined to be identified, as reported by Reuters on Friday (28/10).
As a result of China’s direct intervention, the reference coal price at Ice Newcastle also continued to decline.
CNBC INDONESIA RESEARCH TEAM
(pap / pap)
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