Falling freights, stronger renminbi reshape Asia-Pacific coal trade dynamics

The Asia-Pacific coal market is entering a phase in which competitiveness is increasingly shaped by currency movements and freight costs, rather than coal prices at origin alone. Over the past two weeks, a strengthening renminbi (RMB) and sharply lower freight rates have reopened arbitrage opportunities into North Asia, even as outright coal prices have remained largely range-bound, according to a report by BigMint.

Since the start of 2026, the renminbi has traded below the RMB 7 per U.S. dollar level for the first time since May 2023, hovering around RMB 6.98. At the same time, spot freight rates have fallen by $2–3 per tonne across key Capesize and Panamax routes during the Christmas and New Year period. While seasonal, the decline has come at a particularly sensitive point for regional coal trade flows.

The combined impact has improved delivered cost economics for most coal exporting origins into Southeast Asia and North China. Russian coal remains China’s most competitive import option for a 23rd consecutive week, but its pricing advantage has narrowed markedly. A discount of nearly $30 per tonne in November has compressed to around $11 per tonne, reflecting improved competitiveness from alternative suppliers rather than weaker Russian pricing.

Australian and Indonesian 5,500 kcal/kg coal is now being delivered into East China at near parity, with discounts of around $5.7–5.9 per tonne versus domestic benchmarks. This marks a notable shift from late 2024, when these origins were largely sidelined by high freight costs and adverse foreign-exchange conditions. By contrast, South African and Colombian coal remains uncompetitive, arriving at premiums of $9–22 per tonne, effectively pricing them out of the Chinese market for now.

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Timing is also supportive. The Lunar New Year will fall later this year, beginning on Feb. 17, extending China’s effective trading calendar through most of January. The longer working period, coupled with improving arbitrage economics, could result in higher-than-usual spot trading activity, particularly for mid- and low-calorific value coal.

Price signals point to a cautiously constructive market. Mid- and low-CV coal prices have held firm, underpinned by steady Chinese demand and expectations of tighter Indonesian supply discipline in the coming months.

Overall, the Asia-Pacific coal market appears to be moving toward a more balanced structure. While Russian supply continues to set the price floor, it no longer dominates regional pricing dynamics. Freight rates and foreign-exchange movements have re-emerged as key variables, restoring optionality for buyers and limiting the influence of any single exporting origin.

Editing by Reiner Simanjuntak