Asian thermal coal prices remain stable as supply tightens, but buyers hold back

• Tight Indonesian supply supports prices
  
  
• Weak Indian demand limits upside
  
  

The Asian thermal coal market presented a cautious but quietly bullish picture in the week ended 17 April. After weeks of volatility driven by geopolitical tensions and supply uncertainty, prices began to stabilise. Australian high-energy coal recovered from its recent slump, while Indonesian prices remained firmly supported by structural supply constraints. However, demand from the regions two largest buyers, China and India, remained selective, leaving the market in a delicate balance.

Australia: A modest recovery

The most significant development was the stabilisation of Australian 6,000 kilocalorie (kcal) per kilogram coal. Just one week earlier, a cargo for May loading had traded as low as $131/t on a free-on-board (FOB) basis, causing alarm among sellers. In the week to 17 April, the market regained its footing. A trade for June loading was reported at $132 per tonne, with most bids clustering in the $131.50-132 range.

This recovery suggests that the previous week's drop was an over-correction rather than the start of a sustained downturn. However, caution remains. A low bid of $121 for July loading indicates that buyers are still nervous about the forward curve.

The 5,500 kcal grade saw even stronger activity, with trades ranging from $90 to $94.50/t. Notably, Panamax-sized cargoes commanded a significant premium over Cape-sized vessels, indicating tightness in the supply of smaller, more flexible ships or a preference for specific discharge ports.

Indonesia: Supply cuts outweigh weak demand

Indonesian coal markets remained remarkably resilient, though the reason was entirely on the supply side. The government has now approved annual production quotas, known as RKABs, totalling 580 mnt, close to the 600 mnt target. However, the approval process has been slow, and miners are also being forced to sell a larger share of their output to the domestic market under revised Domestic Market Obligation (DMO) rules. The energy ministry has directed 110 producers to supply a combined 88.87 mnt to state-owned utility PLN this year.

The result is that several major producers are already sold out of export volumes for the year. A 4,200 GAR (3,800 NAR) cargo traded at $62.25/t per tonne, and bids and offers were clustered in a narrow band. Even the government's own reference prices (HBA) for low- and mid-CV coal were raised for early April, reflecting the tightness in these segments.

However, a note of caution emerged at the ultra-low end. A trade for 3,800 GAR (3,400 NAR) coal was reported at just $52.50/t, a significant drop from levels seen only a few weeks ago. This may be an isolated distressed cargo, but it bears watching.

China: Domestic strength, selective imports

Chinese domestic prices continued their steady, grind-higher march. The QHD FOB marker for 5,500 kcal coal rose to $111.97/t, extending a four-week winning streak. More importantly, the government of Guangdong province instructed power plants to raise coal inventories and reduce their reliance on gas-fired generation. Gas consumption for power will be capped at 19 billion cubic metres this year, down from 21 billion in 2025. This policy shift, driven by LNG price volatility and energy security concerns, is a clear long-term positive for seaborne coal demand.

Tender activity was robust, with buyers seeking everything from ultra-low 3,000 kcal material to high-CV 5,500 kcal coal. The 3,800 kcal grade remained the sweet spot, with offers tightly clustered. However, a very low offer for 3,500 kcal coal at RMB 427 per tonne on a delivered basis (DDP) from the previous week proved to be an anomaly, as offers bounced back to RMB 503 by 17 April.

India: Sitting on the sidelines

India remained the missing buyer. Demand was described as "zero" by some traders. State-controlled Coal India produced 768 mnt in the 2025-26 fiscal year, its first annual decline in four years. Yet domestic coal remains plentiful and cheaper than imports. Reflecting this, premiums at Coal Indias domestic e-auctions rose to 45% in March, up from 35% in February, as industrial buyers scrambled for local supply. Until seaborne prices correct, Indian utilities show little urgency to return.

Outlook

The market is being pulled in two directions. Indonesian supply is genuinely tight, and Chinese policy is shifting back towards coal. These are powerful bullish forces. Yet the absence of Indian demand and the fragile ceasefire in the Middle East cap any significant upside.

In the near term, we expect Indonesian mid-CV coal to remain well-supported in the low $60s. Australian high-CV coal appears to have found a floor around $132. However, the ultra-low Indonesian segment needs watching. The return of Indian buying remains the single biggest catalyst that could change the entire dynamic. Until then, the market is likely to drift sideways with a cautiously bullish bias for most grades.