Coal Prices Decline, Indonesia Faces Severe Export Challenges

Coal prices have continued to drop over the past two days, signaling a serious warning for Indonesia. Amid this price slump, Indonesian coal is now under pressure to maintain its export foothold across several countries.

According to Refinitiv data, the coal price on Wednesday (June 25, 2025) closed at US$109.1 per ton, down 0.73%. This marks an ongoing negative trend, with a 3.4% price drop over the last two days.

Fierce Global Competition for Indonesian Coal

As prices fall, Indonesia is facing increasing difficulty retaining its coal export markets.

According to Reuters, the world’s two largest thermal coal importers—China and India—are reducing their imports from Indonesia, shifting to higher-calorific-value coal from other countries. The global price drop has made high-quality coal more attractive.

Indonesia, known as the world's largest exporter of thermal coal used in power generation, is now seeing its dominant position challenged.

Global Coal Export Data (Million Tons)

Recent data reveals China and India are reducing imports from Indonesia faster than the overall drop in their thermal coal demand. Both countries now favor high-CV coal, which produces more energy per ton.

“High-calorific coal is costlier but provides more energy per dollar at current prices. One million tons of high-CV coal can replace 1.2–1.5 million tons of Indonesian coal,” said Vasudev Pamnani, Director of Indian coal trading firm I-Energy Natural Resources, to Reuters.

Zhiyuan Li, an analyst at Kpler, added that Indonesian mid- to low-grade coal is struggling to compete with discounted Russian coal of similar quality in China.

China’s Coal Import Data (Million Tons)

Indonesian coal exports to China totaled 78.45 million tons from January–May 2025, down 11.6% from the same period last year. Meanwhile, shipments from Australia and Mongolia continue to grow.

Ramli Ahmad, CEO of Indonesian mining firm Ombilin Energi, said demand for Indonesian coal may rebound if high-CV coal prices rise due to Middle East tensions. However, low-CV coal will remain under pressure as long as high-energy coal stays more competitive.

Mongolia has become the new dominant supplier to China, taking over Indonesia’s previous position. In India, demand for South African coal has surged, reaching a record market share in the first five months of 2025.

Meanwhile, Indonesia's coal shipments to India dropped 7.24% to 43.59 million tons, facing increased competition from Russia and the United States.

India’s Coal Import Data (Million Tons)

Mysteel analyst Xue Dingcui stated that improved efficiency will continue to boost Mongolian coal exports, even amid falling coal prices in China.

China and India are also ramping up imports from Tanzania, Kazakhstan, Colombia, and Mozambique—countries previously minor players in the coal trade.

Shifting to Domestic Market

China’s total coal imports fell nearly 10% to 137.4 million tons in January–May 2025, while India’s imports dropped over 5% to 74 million tons.

Indonesia was hit hardest, with exports to China dropping 12.3% and to India by 14.3%. Total Indonesian coal exports declined 12% to 187 million tons, according to Kpler.

To counter this, Indonesia's Mining Services Association said that miners are shifting their focus to domestic demand. Local deliveries are expected to grow 3% this year, while exports may decline by around 10%.

Domestic demand, especially from the nickel smelting sector, is set to account for 48.6% of total Indonesian coal supply—its highest share in a decade.

Because the government caps coal prices for power plants, smelters have become a more attractive market than exports.

“Smelters are currently our most promising buyers. We get better prices than from electricity generators or export sales to China,” said Ramli Ahmad of Ombilin Energi.