Expecting commodity windfall
The government has set thermal coal reference price (HBA) for January 2021 at US$75.84 per ton, an increase of 27.14% from December 2020 to reflect recovery of the key export commodity in international market. The government clearly expects windfall from the commodity to help this year’s State Budget because average reference price in 2020 was only US$58.17 per ton.
2021 Outlook: Palm Oil & Derivatives
The Indonesian government has revised up its palm-oil export levy early this month. This will significantly boost revenue side of the State Budget 2021, supporting continuation of the mandatory biodiesel program. Implications to palm oil producers?
2021 Outlook: Gold and Copper
Papua province’s economy, which has been under pressure in the past few years due to downfall of copper and gold production at PT Freeport Indonesia, should recover significantly next year. The economy of West Nusa Tenggara province should also be supported by full commercial operation of Phase VII at Batu Hijau copper and gold mine of PT Amman Mineral Nusa Tenggara (AMNT) in Sumbawa Island.
Coal & Domestic Smelters
Weaker global demand due to the Covid-19 pandemic pressured thermal coal to as low as US$51 per ton this year. Gradual recovery of some major economies, boosted by developments surrounding the vaccines, has recently lifted thermal coal back to US$84 per ton. But, while export market has been under pressure in the first nine months of 2020, some coal miners reported stronger domestic sales.
The Nickel Country (15): EV Disruption
Germany, the largest auto market in Europe, recorded a stunning 20.5% market share for electric vehicles (EVs) last month, of which pure battery EV got 10%. Europe’s largest economy reported steady growth of EV market share from 13.2% in August, 15.6% in September, and 17.5% in October 2020.
The nickel country (11): EV Disruption
Last week, South Korean player Hyundai published a two pages advertisements at Kompas, the largest newspaper in the country, offering its battery electric vehicles Ioniq and Kona for Indonesian market. This week, national media reported about Hyundai’s plan to build EV manufacturing facility in Delta Mas City, which is controlled by Sinarmas Group.
The nickel country (10): Financials
Nickel producer PT Vale Indonesia Tbk (INCO) booked net profit of US$76.6 million in the first nine months of 2020 against US$0.16 million in the corresponding period last year, thanks to higher margins from bigger sales volume and higher average selling price of nickel, while input costs were lower.
Bright spots in 9M 2020: Agriculture
Astra Agro Lestari (AALI) booked net profit of Rp583 billion in the first nine months of 2020, skyrocketed by 424% from the corresponding period last year, thanks to substantial improvement in the third quarter. Kirana Megatara (KMTR) also reported significantly stronger performance in the third quarter, thanks to higher average price of natural rubber.
The nickel country (9): Blackrock
Indonesia’s nickel processing industry has continued to attract global investment names. Blackrock, one of the world’s largest investment management firms, has in recent years invested indirectly in the development of some nickel processing facilities in Indonesia, including nickel sulphate for electric vehicle battery.
The Nickel Country (8)
Nickel was settled at US$15,791 per ton in London Metal Exchange (LME) Tuesday (Oct 120) to represent 42.8% gain from its bottom this year. It is indeed a great news for Indonesia, which is currently the largest exporter. Nickel industry in Indonesia is increasingly attractive with more corporate actions, including initiatives to build an end-to-end electric battery solution from China’s CATL and South Korea’s LG Chemical.