Global coal prices rise on supply concerns and strong Asian demand

Global coal prices moved higher over the past week, with gains seen across Europe, South Africa, Indonesia and Australia.

Steady gains were observed in the coal market over the past week: prices rose in Europe, South Africa, Indonesia and Australia; a sideways trend was seen on the Chinese domestic market; Australian metallurgical coal quotations remained stable.

In the European market, spot quotations strengthened to nearly 120 USD/t over the course of the week. Supportive factors included rising gas prices, several physical market deals carried out by a major international trader, as well as news that the Indonesian government plans to take control of coal export shipments (more on the new rules below).

Forward prices showed divergent dynamics. Gains early in the week came amid diplomatic uncertainty in US-Iran negotiations, sustaining high volatility in the broader oil and gas markets. Notably, on Tuesday, momentum was boosted by the US president’s threats to strike Iran again if no agreement to end military action is reached within the coming week.

However, on Wednesday, after Donald Trump confirmed that negotiations would continue, paper contracts corrected across the entire forward curve.

South African High-CV 6,000 also maintained an upward trend over the week, trading in the 119-123 USD/t range. Richards Bay indices reached their highest levels since late October 2023. Prices are being supported by active purchasing by South Korean power companies. Koen, for instance, concluded a contract for 160k t of 5,800 NAR material for July loading at approximately 134 USD/t CFR. South Korean power utilities are building inventories ahead of a forecast El Nino event and increased coal consumption due to LNG supply disruptions from Gulf countries.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao stood flat at 122 USD/t. Demand was relatively subdued: the chemical sector, a primary driver in recent months, slowed its purchasing. Traders focused on fulfilling existing contracts.

A constraining factor is rising hydropower generation following heavy rains in recent weeks. On May 20, water discharge from the Three Gorges Dam reservoir increased 68% compared to the previous year. Over the next four weeks, rainfalls 20–50% above seasonal norms are forecasted across southern, eastern, central, and northern Chinese provinces. Rainy weather is suppressing air conditioning demand, which has already led to reduced coal-fired power generation.

The impact of potential Indonesian export cuts under the government’s new policy may be limited, given that most material is used for blending and is also supplied under long-term contracts.

Coal stocks at 9 major ports increased to 27.52 mio t (+0.13 mio t w-o-w), while inventories at 6 major coastal thermal power plants stood at 12.86 mio t (+0.05 mio t w-o-w).

Indonesian 5,900 GAR soared to nearly 104 USD/t, while 4,200 GAR strengthened above 64 USD/t amid limited supply.

According to market participants, a significant number of producers have not received production quotas (RKAB). For others, priority is being given to domestic market obligations (DMO). An additional price driver, beyond limited material availability, is higher production costs for Indonesian mining companies due to rising global fuel prices stemming from the Middle East conflict. One producer stated that costs have increased by 40%.

Spot market demand remains steady. Notably, strong demand for high-CV Indonesian material is coming from South Korea, Japan, and Taiwan due to energy security concerns arising from the Iran-US conflict. Vietnam, the Philippines, and

Bangladesh are favoring mid-CV material, while China is focusing on low-CV coal.

The Indonesian government plans to create a centralized export system for natural resources, including coal, crude palm oil, and nickel ferroalloys. International buyers would no longer be able to conduct direct negotiations with local mining companies and traders.

The transition will begin on June 1, and by September 1, all Indonesian coal exports to foreign buyers will be channeled through a single state-owned enterprise. Authorities state the reform is aimed at improving administrative control, preventing invoice undervaluation and transfer pricing, and enhancing state oversight of pricing and sales markets.
The government will gain leverage to restrict spot market supply, enforce state-set minimum prices, and redirect volumes to meet domestic power needs, potentially reducing near-term seaborne availability for major Asian power utilities.

The news triggered a sell-off in Indonesian energy and coal mining company shares and was received negatively in overseas trading markets. Experts also noted that the new policy could potentially benefit Chinese coal mining companies.

Australian High-CV 6,000 rose to 133-134 USD/t, supported by demand from Japan and South Korea. Additional factors include reduced output following weather-related disruptions in March and higher mining costs due to increased diesel prices.

Australian coal traders stated that Indonesia’s new coal export policy could strengthen their negotiating position, as more consumers will look for alternative supply sources.

Australia’s HCC metallurgical coal index slightly firmed to 241 USD/t. Activity in the Australian metallurgical market remained low due to limited demand from India (amid rupee depreciation), while sellers were also reluctant to lower prices to attract buyers. On the other hand, market participants cite limited availability of high-quality Australian coal, as well as rising production and freight costs, which could continue to support quotations.

In China, sources report no interest in Australian material due to a persistent price gap between the seaborne market and the Chinese domestic market, where quotations are declining.

Australian Foxleigh and several Northeast Asian steel mills have agreed on a lagged price for PCI coal for the first calendar quarter of 2026 at 168.00 USD/t FOB Australia. According to traders, negotiations were protracted and difficult, as Northeast Asian mills seek to secure alternative PCI supplies, including from companies not subject to sanctions trading Russian-origin coal.

In early February, Foxleigh and Nippon Steel agreed on a forward price for the first quarter of 163.75 USD/t FOB Australia. In early April, a forward price for PCI for the second quarter of 2026 was agreed at 178.00 USD/t FOB Australia.

Source: CCA