Thursday, September 14, 2017

Indonesian coal miner shares tumble on possible new pricing rules

Indonesian coal miner shares tumble on possible new pricing rules

Share prices of some of Indonesia's biggest coal miners plunged on Wednesday
after the country's mining minister said he would be open to revising
domestic coal pricing rules.

PT Bukit Asam Tbk was worst hit, tumbling 17 percent to close at 10,075
rupiah ($0.7632), while PT Bumi Resources Tbk dropped 9 percent to 218
rupiah, and PT Adaro Energy Tbk fell 8 percent to 1,715 rupiah.

Domestic media reported that Energy and Mineral Resources Minister Ignasius
Jonan was considering drafting new rules on marketing coal for domestic
supply, as part of government efforts to reduce electricity prices. The
comments were later confirmed by Reuters.

Recent high coal prices have put pressure on state electricity utility
Perusahaan Listrik Negara (PLN), which buys the bulk of the roughly 90
million tonnes of coal consumed domestically each year.

Indonesia requires miners to set aside a portion of their output, based on
assumptions of domestic demand.

"To devise the right coal price formula, Mr Jonan will definitely listen to
input from related stakeholders, primarily coal companies," said Hadi
Djuraid, who works in Jonan's office.

However, Djuraid said there was no timeframe yet for a new pricing formula.

PLN has been pushing for the government to adopt a cost plus margin
mechanism for coal purchases, which would allow it to maintain pricing
stability, but which analysts say would hurt coal producers' profits.
Djuraid, however, said the government would not just take PLN's proposals
into account.

PLN strategic procurement director Supangkat Iwan Santoso was earlier quoted
by domestic news portal Detik.com as saying the company hoped to set coal
prices at cost plus a 15 percent to 25 percent margin.

The proposed pricing mechanism would likely dent coal companies' profits,
said Vicella Tjhin, an independent analyst.

"The main impact would be on companies that sell to PLN," Tjhin said,
referring to Adaro and Bukit Asam.

Australia's coal cargo prices for export from its Newcastle terminal hit a
2017 high of $103.5 per tonne at their last close, driven by strong Asian
demand.

The Newcastle free-on-board (FOB) contract is seen as a benchmark for Asian
thermal coal prices.

--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

Link to Original Article:
https://www.reuters.com/article/indonesia-coal-prices/indonesian-coal-miner-
shares-tumble-on-possible-new-pricing-rules-idUSL4N1LU3L2


--- --- --- --- --- --- --- --- --- --- --- --- --- --- ---

John Diecker
APT Consulting Group Co., Ltd.

www.aptthailand.com




.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.