Asian coal market firms as Indonesian supply uncertainty lifts prices across countries

• Indonesian policy uncertainty tightens supply, lifts Asian prices
  
  
• Indian buyers active but cautious amid rising delivered costs
  
  

Prices strengthen across Asia, led by Indonesia

Coal prices across Asia have moved higher in recent weeks, mainly because supply from Indonesia has tightened and buyers are competing for limited cargoes.

In Indonesia, low-rank coal prices have edged up across grades. Coal of around 3,400 kcal/kg GAR is now near $33/t FOB, while 3,800 kcal/kg GAR material is around $41/t FOB. Mid-range coal at 4,200 kcal/kg GAR is close to $50-51/t FOB, and higher-calorific coal around 5,000 kcal/kg GAR is trading at $67/t FOB. Premium Indonesian coal around 5,800 kcal/kg GAR is now close to $84/t FOB.

These increases have pushed delivered prices higher in India. At Indian ports, 3,400 kcal/kg GAR coal has risen to about INR 4,850/t, 4,200 kcal/kg GAR coal to around INR 6,350-6,450/t, and 5,000 kcal/kg GAR coal to roughly INR 8,200-8,300/t depending on the port.

Australian coal prices remain firm as well. Newcastle coal around 5,500 kcal/kg NAR is trading near the mid-$80s/t FOB, while higher-grade 6,000 kcal/kg NAR coal continues to hold above the mid-$110s/t FOB level.

South African coal has also strengthened. Richards Bay coal around 5,500 kcal/kg NAR has climbed toward $90/t FOB, supported by demand from India and other Asian buyers seeking alternatives to Indonesian supply.

Supply constraints, policy uncertainty driving market

The main reason for rising prices is uncertainty in Indonesia.

Coal producers are waiting for approval of their annual mining plans, known as RKAB. Because of this uncertainty, miners are cautious about production and export commitments. Many are offering less coal to the market or quoting higher prices. This has reduced spot availability and pushed prices up across Asia.

Stocks of mid- and high-calorific coal at Indian ports are also limited. Traders report that few new vessels are arriving, especially for better-quality coal used in blending. This shortage is forcing buyers to compete for available material, which is lifting prices further.

Freight costs have also increased slightly, particularly for Panamax vessels. Higher shipping costs add to delivered coal prices and reinforce the upward pressure in importing markets.

Even though overall coal stocks at Indian power plants appear comfortable, supply distribution is uneven. Some plants still face shortages, which means buying activity continues even when total national stocks look adequate.

Demand stable across regions

Demand across Asia is steady rather than booming.

Indian buyers continue to purchase imported coal because of blending needs and plant-level shortages. Industrial users, especially those needing mid- or high-CV coal, remain active buyers.

However, consumers are also cautious about rising prices. Some are considering domestic coal or alternative fuels where possible. This selective buying behaviour explains why prices are rising, but trading volumes remain moderate.

In China, domestic coal prices have risen earlier in the year and are now stabilising. This strong domestic price floor still supports imports, even though buying activity is not aggressive.

Outlook

In the short term, coal prices in Asia are likely to remain firm.

If Indonesian supply remains uncertain, prices for mid- and high-calorific coal should stay supported, especially in India. Freight costs and limited vessel availability may also continue to influence delivered prices.

However, if Indonesian production plans are finalised and exports increase, the market could stabilise quickly. Likewise, if buyers switch more toward domestic coal or alternative fuels, price increases could slow.

For now, the Asian coal market is best described as firm due to tight supply, but still cautious, with buyers watching policy developments in Indonesia before making large commitments.