Key facts
- Thermal coal prices are rising due to supply concerns from Indonesia and China.
- Indonesia is implementing new export controls requiring all coal exports to pass through a state-owned enterprise.
- A deadly mining accident in China has led to mine closures and increased safety scrutiny.
- Strong demand for coal is driven by LNG shortages linked to the Iran war and AI infrastructure growth.
- Indonesian thermal coal exports have decreased year-on-year, with significant drops from China and India.
- Coal futures for delivery in Rotterdam have increased by nearly 30% since late April.
Thermal coal prices are experiencing a resurgence driven by a confluence of supply-side pressures, including new export controls from Indonesia and a significant mining accident in China. These factors are exacerbating existing supply concerns amid robust demand, which is being fueled by a shortage of liquefied natural gas (LNG) attributed to the ongoing conflict in Iran and the rapid expansion of data centers and AI infrastructure.
Indonesia has implemented a new policy requiring all thermal coal exporters to report to a state-owned enterprise starting this month, with full state control over exports set to begin in September. This overhaul aims to curb under-invoicing and ensure full royalty payments, though it raises concerns for smaller producers with limited margins. Indonesian thermal coal exports have already seen a 9.5% year-on-year decline in 2026, with notable reductions in shipments to China and India.
Simultaneously, a deadly coal mine accident in China's Shanxi province, the most fatal in over a decade, has resulted in mine closures and is expected to trigger widespread safety inspections. While the accident directly impacted metallurgical coal, the resulting scrutiny is likely to affect thermal coal mining operations as well. This disruption to domestic production could significantly increase China's demand for imported coal, despite the country being the world's largest producer, importer, and consumer.
The combined effect of these supply disruptions is pushing coal prices higher. Front-month futures for coal delivery in Newcastle and Rotterdam have seen a notable increase, with European contracts experiencing the most significant gains, rising nearly 30% since the latter half of April. This price recovery is occurring even as demand from key buyers like China and India has softened, indicating the market's sensitivity to supply constraints.