Coal Prices Slump, Awaiting El Niño for Takeoff
Jakarta, CNBC Indonesia - Coal prices have levelled off after soaring high. According to Refinitiv, the June coal contract closed at US$135.8 per tonne, down 0.44% in trading on Tuesday (13/5/2026).
This weakening contrasts with the 1.45% surge on Monday. Coal prices have stabilised following more negative news from China.
After reporting a decline in imports, China has delivered further negative updates.
Total coal imports in April 2026 reached 33.08 million tonnes, down 12.54% from the previous year and 15.3% lower than in March.
The thermal coal market at Chinese ports has also tended to stabilise after previously strengthening, amid a tug-of-war between support from high supply costs and weak demand from end consumers.
Transaction activity at major Chinese ports has begun to slow as buyers adopt a cautious approach entering the low season, while sellers maintain prices due to persistently high production and import costs.
Weak demand is primarily driven by electricity consumption that has not yet risen significantly, ample coal stockpiles at power plants, and seasonal conditions not yet peaking in summer.
On the supply side, import coal prices, including supplies from Indonesia, remain high, providing a floor for domestic Chinese prices. In other words, even as buyers hold back, sellers are reluctant to cut prices too deeply due to limited profit margins.
Overall, this situation has left the thermal coal market at Chinese ports moving sideways.
High supply costs are supporting prices, but weak demand is hindering further increases. This scenario is crucial for Indonesian exporters, as China is Indonesia’s primary market for thermal coal.
El Niño: Can It Boost Coal Prices?
UBS warns of the potential emergence of a “super El Niño” phenomenon starting from mid-2026, which could tighten the global thermal coal market through sea routes and drive prices higher. In this scenario, coal producers from Indonesia and Australia are expected to be the main beneficiaries.
The World Meteorological Organization (WMO) predicts that the El Niño phenomenon will develop in the coming months. Some scientists even assess this event as potentially the strongest of the century, driven by high sea surface temperatures in the Pacific Ocean.
According to UBS, El Niño typically triggers extreme and prolonged heatwaves in Asia. This is significant because coal-fired power plants account for about 70% of electricity supply in India and around 55% in China, and still dominate the energy mix in many other Asian countries.
Increased use of air conditioning is expected to boost coal consumption and imports. At the same time, changes in rainfall patterns in Latin America and Africa could reduce hydroelectric power production, which has historically contributed a large share of electricity generation in those regions.
UBS assesses that this risk emerges when the global energy system is already under pressure due to the conflict between the United States and Iran, potentially exacerbating energy supply tightness.
On the supply side, UBS notes potential constraints from Indonesia’s new export quota policies. However, based on recent industry visits, Indonesian authorities are deemed willing to approve additional export quotas once coal prices rise.