Key facts
- Indonesian thermal coal exports fell 23% in August year-on-year.
- Indonesian coal exports were the lowest for August in five years.
- Global coal demand is on track for a record high this year.
- The IEA forecasts Indonesia's coal output to decrease by over 12 million tons in 2026.
- El Niño has reduced rainfall, lowering river water levels and disrupting coal barge movements.
Indonesia, the world's largest exporter of thermal coal, is experiencing a significant drop in its shipments, with August exports falling 23% year-on-year and 6.54% month-on-month. This marks the lowest August export volume in five years, according to the Jakarta Post. The decline occurs despite a global surge in coal demand, which is projected to reach a record high this year due to the Middle East crisis disrupting LNG supplies and prompting a shift to coal.
Factors contributing to Indonesia's reduced exports include government production quotas, which were initially slashed and then revised, creating policy uncertainty for buyers. Additionally, the strong El Niño weather pattern has led to reduced rainfall and lower river water levels, hindering the movement of coal barges to export terminals.
The International Energy Agency (IEA) forecasts Indonesia's coal output to fall by over 12 million tons, or 1.5%, this year. The IEA also noted that ongoing policy discussions regarding export taxes, revenue-sharing, mining permits, and the potential centralization of exports through a state-controlled entity are adding to buyer anxiety. Matthew Boyle, head of research at Ashon International DMCC, stated that his firm's sales of Indonesian coal are expected to be less than half of last year's volume.