Asian thermal coal steadies as Chinese buying offsets weak Indian demand; Indonesian uncertainty keeps traders cautious

• Chinese demand remains supportive, but buying turns more selective
  
  
• Indian buyers rely on domestic supply, comfortable port inventories
  
  

Asian thermal coal markets remained broadly supported through the second half of May, with Chinese restocking demand and tighter Indonesian spot availability underpinning sentiment. Yet weak Indian import appetite, selective buying behaviour, and uncertainty around Indonesia's proposed export reforms prevented a sharper rally.

The market has consequently turned increasingly selective. Higher-calorific value coal remained relatively better supported, while low-calorific value grades began showing signs of resistance after a sustained rise through April and early May.

Chinese demand continued to anchor the seaborne market as utilities and traders secured cargoes ahead of peak summer electricity demand. Buying remained concentrated in Indonesian low- and mid-calorific coal, supported by firm domestic coal prices and active tendering across multiple grades.

China's domestic coal market remained stable but firm through late May. BigMint assessments showed 5500 NAR coal ex-Qinhuangdao/Ordos at RMB 651/t on 25 May, unchanged w-o-w but up from RMB 601/t a month earlier and RMB 584/t three months ago, indicating domestic fundamentals remain supportive despite moderating momentum.

Chinese demand remains supportive, but buying turns more selective

Chinese utilities continued tendering for Indonesian coal, particularly lower-calorific cargoes, supported by summer inventory building and competitive delivered economics.

BigMint assessments showed 4200 GAR Indonesian coal delivered into Tianjin at $74/t CNF, stable w-o-w and up from $71/t a month ago. At the export end, FOB Kalimantan 4200 GAR remained steady at $64/t, compared with $61/t one month earlier and $53/t three months ago, reflecting sustained Chinese interest and tighter prompt availability.

However, buyers increasingly showed price discipline. Domestic logistics costs softened during May, reducing procurement urgency and suggesting physical tightness may be less acute than earlier feared. Traders noted that while utilities continue securing tonnes, buyers are increasingly resisting aggressive price increases, particularly for higher-CV cargoes.

Indonesian supply constraints continue to underpin sentiment

Indonesia remained the market's principal source of support, with prompt cargo availability constrained by lingering production approval delays, domestic market obligation (DMO) requirements, and logistical disruptions.

Low-calorific value coal retained relatively stronger support, though late-May trading indicated growing buyer resistance after weeks of gains.

BigMint assessments showed FOB Kalimantan 4200 GAR coal steady at $64/t, while 5000 GAR Indonesian cargoes into Vizag stood at $97/t CNF, up from $91/t a month earlier, highlighting how stronger seaborne pricing has filtered through into delivered Asian markets.

Higher-calorific Indonesian coal, however, appeared more vulnerable to correction as elevated premiums and freight costs reduced buyer appetite.

Export policy uncertainty clouds market sentiment

Indonesia's proposal to centralise exports of key commodities, including coal, through a state-backed entity has also introduced a fresh layer of uncertainty into the market.

While the proposal is unlikely to disrupt physical trade immediately, uncertainty around implementation slowed some spot negotiations, with sellers reassessing offering strategies and buyers waiting for greater clarity over contract execution.

For now, the proposal remains more of a sentiment risk than a supply disruption. However, traders acknowledge that any interference with Indonesia's export flows could materially tighten Asian thermal coal availability later in the year.

India remains missing pillar of support

India continued to cap upside despite rising temperatures and strengthening regional benchmarks.

Utilities and industrial consumers largely stayed away from prompt imports, relying instead on healthy domestic coal availability and comfortable inventories at ports. A weaker rupee and elevated delivered costs further reduced appetite for dollar-denominated cargoes.

BigMint assessments reflected the cost challenge. 4200 GAR Indonesian coal into Kandla stood at $79/t CNF, while Australian 5500 NAR cargoes into Mundra were assessed at $126/t CNF. RB2 (5500 NAR) South African coal at Paradip was assessed at INR 11,450/t, while Indonesian 4200 GAR coal at Kandla stood at INR 8,400/t, levels that continued to discourage broad-based spot buying.

Demand, therefore, remained confined to selective procurement and stock-and-sale cargoes rather than broad-based replenishment.

South African coal remained relatively resilient despite weak Indian participation. FOB Richards Bay RB2 (5500 NAR) was assessed at $97/t, marginally below the prior day but still above $92/t one month ago, suggesting underlying Asian demand continues to provide support.

Australian market remains steady

Australian Newcastle coal remained broadly stable, with FOB Newcastle 5500 NAR assessed at $99/t, unchanged w-o-w and up from $89/t one month earlier.

Forward sentiment improved modestly, though liquidity remained thin and buyers continued resisting aggressive premiums for forward-loading cargoes.

Bottom line

Asian thermal coal markets remain supported, but conviction is uneven.

Chinese buying continues to underpin prices, particularly for Indonesian low-calorific value coal, while India's muted participation limits broader upside. Indonesian supply constraints continue providing an underlying floor, but higher-CV coal increasingly faces resistance as buyers become more price-sensitive.

For now, the market remains firm -- but increasingly cautious rather than outright bullish.