Commodity Boom Continues, Coal Exports Grow 28 Percent At All-Time Highest Price Level

Illustration (Photo: Doc. Antara)

JAKARTA – PT Bank Mandiri Tbk reported that the performance of Indonesia's coal export volume grew 28.8 percent year-on-year (yoy) in August 2021. This achievement shot up when compared to the July 2021 book which rose 6.7 percent.

"In terms of price, coal has penetrated the highest price of all time," the bank coded BMRI's stock-coded report said in the Daily Economic And Market Review, Tuesday, October 26.

It was stated that based on Bloomberg data, the price of coal had reached USD 269.5 per ton on October 5, 2021. This price is the highest price in history.

To date, the average year-to-date price is USD 127.4 per tonne, or 80.6 percent higher than the average price in 2020 which was USD 60.3 per tonne.

Despite experiencing growth, Bank Mandiri sees that this condition has not been able to achieve the expected target. This is reflected in the Domestic Market Obligation (DMO) which is still not fulfilled. BMRI said, as of October 26, 2021, the realization of DMO was 63.47 million tons.

"The realization has only reached 46.16 percent of the DMO plan of 137.5 million tons," said the state-owned bank.

Although this mineral is currently in the commodity boom phase, it is believed that price developments will return to fundamental levels after shooting high enough at the end of 2021.

“We estimate the potential for a price correction to be one of the closest risk factors that will be faced by the domestic coal industry. We consider the current energy crisis to be the last driver that places prices far above their fundamentals, which is around 70 to 80 US dollars per tonne,” concluded Bank Mandiri.