Coal Price Plunges After Rally, Warning Sign for Indonesian Business

Jakarta, CNBC Indonesia - Coal prices slumped after briefly soaring to touch US$150 per ton. Referring to Refinitiv data, coal prices in trading on Monday closed at US$146.95 per ton, a fall of 2.26%. This decline reversed Monday’s surge, when coal breached US$150.35 per ton, its highest position since October 2024. Coal prices weakened in line with oil prices, as the two are substitutes. In trading on Tuesday, West Texas Intermediate crude oil futures fell 3.4% to close at US$88.20 per barrel, while Brent crude fell 2.98% to US$91.45 per barrel. Despite the global weakness, thermal coal prices at major ports in northern China remained relatively strong, even though demand has not fully recovered. Rising coal prices at mining areas became the main support for the market after several producers in key production regions in China began raising selling prices amid improving demand from traders and the non-electricity sector, as well as continued tight mining safety supervision. However, the room for price increases is seen as limited. Consumption from downstream sectors remains relatively sluggish, whilst coal stocks at major Bohai Rim ports remain high. Combined inventories at the ports of Qinhuangdao, Caofeidian, Jingtang, and Huanghua reached approximately 28.8 million tonnes in early June. On the other hand, the imported coal market faces pressure. Indonesian low-calorific value coal for prompt shipment experienced price weakness due to abundant supply and high stockpiles at southern Chinese ports. This situation forced some sellers to offer discounts to attract buyer interest. Some suppliers chose to offload cargoes at cheaper prices when ships were nearing their destination ports to avoid soaring demurrage costs. Although the spot market remains sluggish, forward contract prices are relatively supported as market participants anticipate tighter supply in the second half of 2026. For Indonesia, this condition signals that the near-term outlook for low-calorific value coal still faces pressure. High inventories in China, abundant supply, and weak spot purchasing activity could limit increases in export prices. Meanwhile, the Chinese metallurgical coke market shows a different dynamic. Physical coke prices remain relatively firm, supported by expensive coking coal prices and tight supply. However, coke futures are under pressure as investors begin to worry about future steel demand prospects and the prevalence of profit-taking.