Battered from All Sides, Coal Prices Slump for Two Consecutive Days

Jakarta, CNBC Indonesia - Coal prices have continued to fall. Referring to Refinitiv data, the price of coal on Wednesday (5/8/2026) closed at US$ 129.3 per ton, a drop of 1.3%. This decline extends a negative trend, with prices slumping 3.68% over the last two days. The weakening of coal prices was triggered by a further drop in oil prices and demand dynamics. Oil prices have fallen further and are now at US$ 79 per barrel, their lowest position since 15 July 2026. Oil and coal are two commodities that influence each other. Cheaper oil prices reduce the incentive for energy-importing countries to switch to coal as an alternative fuel, especially in Europe and Asia. The decline in coal prices was also triggered by a 7.51% year-on-year surge in Indian coal production to 69.75 million tonnes in July 2026, which increased domestic supply and reduced the need for imports. In addition to rising production, coal distribution to power plants and industrial consumers also increased significantly. Indian coal shipments surged 17.34% compared to the previous year. On the other hand, coal demand in China is starting to improve as the weather gets hotter and the use of air conditioning increases, driving up electricity consumption. This factor helped prevent a deeper price decline. Coal prices at northern Chinese ports continued to strengthen, supported by tighter supply and rising electricity needs during the summer. However, the rally is losing momentum as real demand has not shown significant strengthening. Weather that was not as hot as expected in several Chinese regions meant electricity consumption and spot coal purchases by power plants were not as high as market expectations. At the same time, shipping activity remains sluggish, reflected in the reduced number of vessels queuing for loading at major northern Chinese ports. Pressure also came from abundant coal stockpiles. Inventories at southern ports such as Guangzhou continue to rise, while stocks at power plants remain at high levels. This situation means utility companies have not yet been compelled to make additional aggressive purchases. Meanwhile, from the United States, it was reported that in the second quarter of 2026, coal transport volumes by two major railway companies in the eastern US, CSX and Norfolk Southern, increased by 5% and 4% respectively. However, domestic coal shipments fell by 2% and 8%, while export volumes surged by 12% and 25%. This data indicates that the growth in US coal transport was driven more by foreign demand than domestic electricity sector consumption. The US government has issued various policies to support the coal industry, including easing regulations and attempting to delay the closure of coal-fired power plants. However, coal consumption for power generation from January to May remained lower than the same period the previous year. This occurred because natural gas and solar energy are increasingly replacing coal in the power generation mix. Weak domestic demand is expected to limit the potential for thermal coal price increases in the US. On the other hand, rising exports could support thermal and metallurgical coal prices from the Appalachia region. However, the increase in US export supply also has the potential to limit coal price increases in the international market.