Asian thermal coal market firms on Indonesian supply squeeze, Chinese restocking

• Chinese buyers focus on low-CV grades as domestic prices rise
  
  
• High-CV coal shows sharpest weekly gains on tight supply
  
  

The Asian thermal coal market entered May 2026 with distinct upward momentum, driven by a severe supply squeeze in Indonesia and selective pre-summer restocking by Chinese buyers. Prices across low- to mid-energy grades have gained steadily over the past week, with traders expecting further firming once China returns from Labour Day holidays.

Indonesian supply constraints tighten market

Indonesian coal supply remained severely restricted through late April. Miners await final RKAB production quotas, while low water levels in Central Kalimantan have disrupted barge transport. Several producers reported being fully sold out for May-loading cargoes and have shifted focus to June.

Official Indonesian HBA reference prices for May 2026 were issued on April 30, broadly aligned with prevailing FOB market levels and indicating limited downward flexibility for producers.

China: Selective buying ahead of summer

Chinese buyers remained active through late April, focusing primarily on Indonesian low- to mid-CV cargoes. Pre-holiday restocking ahead of the May Day holidays (May 1-5) and rising domestic coal prices drove this selective demand.

Coal stocks at major Chinese ports declined through April. A China-based trader noted that spot electricity prices in the country were rising due to higher consumption, and power plants have been instructed to build inventories ahead of summer. End-users are expected to resume buying for June laycans after the holidays.

Landed prices for seaborne coal in yuan terms rose across all grades over the past week, with the sharpest gains in high-CV material. The widening gap between import prices and domestic Chinese levels suggests buyers still see value in seaborne cargoes, though they remain selective and bid below seller offers.

High-CV coal leads rally

The tightest segment is high-CV coal, with Indonesian 6,300 GAR and Australian-grade material seeing the sharpest price increases over the past week. This reflects both supply constraints in

Indonesia and growing demand from Northeast Asian buyers, including South Korea and Taiwan, who are securing cargoes through long-term contracts.

South Korean regional utilities are reportedly viewing coal-fired power plants as critical security reserves to maintain grid stability amid ongoing geopolitical uncertainties, supporting demand for high-CV material.

India: Demand poised for pre-monsoon pick-up

Indian buyers largely remained on the sidelines through late April, with adequate port inventories and a continued preference for domestic coal. Imported coal-based power plants saw imports drop 20% year-on-year in FY 2025-26 to 38.62 million mt, according to CEA data.

However, demand is expected to pick up ahead of the monsoon. India's peak power demand hit an all-time high of 256 GW on April 25, with thermal power accounting for 67% of generation. The power ministry has directed imported coal-based plants to operate at full capacity from April 1 to June 30, which could boost import demand in coming weeks.

An India-based trader noted that cement producers were actively seeking alternatives to petcoke, with thermal coal from various origins becoming increasingly attractive as petcoke offers remain elevated.

Outlook

Asian thermal coal markets entered May with clear upward momentum, supported by tight Indonesian supply, expected Chinese restocking after holidays, high-CV tightness from Northeast Asian demand, and anticipated Indian pre-monsoon buying.

Near-term bias: Firm to higher, with Chinese post-holiday buying pace and Indonesian supply recovery as key watchpoints.