Indonesia’s coal reference price for June was recently set at approximately $96.50/ton, a decline of $5.50 (-5%) from May’s reference price which had been set at about $102/ton (Indonesia’s coal reference price is based on coal with a calorific value of 6,322 kcal/kg). June’s reference price marks the lowest price since November 2010.

Indonesian thermal coal prices, like Australian and South African thermal coal prices, have continued to come under significant pressure partially due to the large amount of coal that remains stockpiled at major Chinese power plants and coal ports. Stockpiles are very high because China imported a record 25.05 million tons of coal in April.

Going forward, we expect regional thermal coal prices will remain low during the next few weeks. It will likely take a two to three weeks before stockpiles are able to be drawn down by a moderate amount. A rebound in thermal coal fixture volume and coal prices is likely to occur by the end of June on the strength of peak summer demand.