Two oceans, two markets - Why Atlantic thermal coal prices are crashing while Pacific holds firm

• Subdued demand, oversupply weigh on Atlantic prices
  
  
• Pacific remains firm on strong Asian buying, tight supply
  
  

As European prices slide toward $100, Asian buyers are continuing to pay stable prices for Indonesian and Australian coal. What explains the divide?

Atlantic weakness: Soft demand and aggressive offers

In the Atlantic, the market has weakened. CIF ARA 6,000 NAR coal was assessed at just over $102/tonne (t) in early April, down from recent highs. FOB Richards Bay 5,500 NAR coal fell to below $94/t. The reason is simple: demand is soft. South African coal faces competition from lower-cost alternatives, and buyers from Southeast Asia are not stepping in. Oversupply is driving the market softness.

Spot offers into Amsterdam-Rotterdam-Antwerp (ARA) are being made aggressively, with some close to $100/t. What is striking is that these are not off-specification cargoes. They are standard specification coal that qualifies for the main index calculation. Yet the financial contract for the fourth quarter of 2026 is trading at a significant premium to spot physical prices. Therefore, something will have to give. Either spot prices will rise, or forward prices will fall.

Pacific support: Southeast Asia steps in

In the Pacific, the story is different. Asian thermal coal markets remained broadly unchanged in early April, supported by strong buying from Southeast Asia. Vietnam and the Philippines are driving spot purchases. An Indonesian producer reported robust buying from both countries, where energy security concerns are prompting competitive bids across all grades.

South Korea is also active. The country is seeking multiple grades and has relaxed sulphur restrictions to meet heightened needs amid a crunch in natural gas supply. Taiwan and Japan are requesting early shipments, both under term and spot contracts, because of LNG tightness and the need to meet power demand.

Supply-side tightness in Indonesia is adding to the support. One Indonesian producer flagged noticeable tightness in the mid- to high-CV segment, with no meaningful relief even after the approval of recent output volumes. Another producer said they were effectively sold out for the year for export sales, having been asked to supply nearly 50 percent of their approved volumes to the domestic power sector.

What explains the divide?

So why the disconnect? The Atlantic is responding to the US-Iran ceasefire and weak industrial demand in Europe. The Pacific is responding to LNG supply fears and energy security-driven buying. LNG export transit via the Strait of Hormuz is almost back to normal, but these are largely vessels that were already loaded and ready to go. An estimated 800 vessels with 20,000 seafarers remain blocked. The key question is whether flows can be sustained given the severe damage inflicted on Qatari gas facilities.

For now, the two basins are moving in opposite directions. The Atlantic looks weak. The Pacific looks supported. Traders will be watching to see which one gives way first.