Indonesian coal prices hold firm amid policy uncertainty and supply risks

Indonesian thermal coal prices have shown unexpected resilience despite weakening demand across major Asian markets, as supply-side uncertainty and seasonal disruptions prompt producers to hold firm on offers, Bigmint reported.

Indonesia, the world’s largest exporter of low- and mid-calorific value coal, has entered an unusual period of pricing firmness even as buyers in China and India push for deeper discounts. Market participants say the disconnect reflects heightened uncertainty over Indonesia’s coal policy framework heading into 2026, combined with operational risks linked to the upcoming monsoon season.

A key factor weighing on market liquidity is the absence of an approved production quota for 2026. The delay, considered atypical for December, has made miners cautious about committing volumes into a falling market. Producers are concerned that upcoming policy decisions could include tighter production caps, export curbs, the introduction of a thermal coal export tax, or stricter domestic market obligation requirements.

Read also: China’s supply tightening seen lifting Indonesian coal prices in 2026

At the same time, wet-weather risks are beginning to shape market expectations. The January–March monsoon period is historically the most challenging quarter for Indonesian miners, often resulting in lower productivity, damaged haul roads, port congestion and reduced output. With these risks approaching, producers are increasingly reluctant to sell aggressively at current price levels.

The market response has been a widening bid-offer gap across Asia. Chinese buyers have largely stepped back, leaving Indonesian offers untouched. Prices for 3,800 GAR coal remain at around US$40–41 per tonne FOB, while bids are stuck in the high US$30s. Offers for ultra-low-rank coal at around US$38 per tonne FOB have also failed to attract buying interest.

In India, Indonesian 4,200 GAR coal continues to be the most competitive imported fuel, with delivered prices reported at around INR 1,350–1,390 per gigacalorie, supporting steady buying interest despite broader market weakness.

Traders say the persistent bid-offer gap has become a clear indicator of stress in the regional coal market, reflecting soft demand, firm producer sentiment and forward pricing that remains highly dependent on policy outcomes in Indonesia.

As global coal markets head into what is shaping up to be a bearish winter, Indonesia’s supply discipline and policy uncertainty are effectively setting a floor for low-CV coal prices across Asia, market participants said.

Editing by Alexander Ginting