Coal Prices Slump for Five Consecutive Days as China Sends Global Markets into a Fever
Jakarta, CNBC Indonesia - Coal prices continued their downward trend. Referring to Refinitiv data, coal prices on Tuesday (7/7/2026) closed at US$127.95 per tonne, down 0.23%. This extended the commodity’s decline to 1.2% over five consecutive days.
According to Bigmint, several sentiments are haunting coal prices. The Asian thermal coal market has entered a sharp correction phase due to weakening demand from China, a country that has been the main pillar of coal prices in the region. The weakness, which initially occurred only in China’s domestic market, has now spread to the seaborne market, dragging down benchmark Newcastle Australia prices, Indonesian Free on Board (FOB) prices, and imported coal prices in India.
Market conditions have reversed compared to May and early June, when supply concerns, Indonesian export uncertainties, and seasonal demand supported prices. Currently, coal stocks at Asian power plants are at comfortable levels, industrial activity is slowing, domestic coal supplies in China and India are abundant, and the arrival of the rainy season in India is further reducing purchasing activity.
China Makes Coal Prices Weaker
China’s domestic coal market has weakened rapidly over the past two weeks, removing one of the main factors that had supported Asian coal prices. Concerns about mine inspections, supply disruptions, and limited Indonesian exports have eased. Instead, the market is now facing rising inventories and slowing consumption. Power plants in China have sufficient stockpiles, inventories at northern ports continue to grow, terminals in South China are nearly full, and vessels carrying imported coal are beginning to experience unloading delays.
High rainfall has increased hydroelectric power generation, reducing coal consumption. Meanwhile, industrial consumers such as cement plants and chemical producers are only purchasing coal for short-term needs. Mine-mouth coal prices have fallen by around 5-20 yuan per tonne in several production areas as buyers become more cautious. Domestic coal freight rates have also dropped sharply, with the shipping tariff from Qinhuangdao to Shanghai plummeting from US$7.09 per tonne in mid-June to just US$3.12 per tonne in early July, reflecting a slowdown in coastal coal distribution.
Australian Export Coal Prices Fall
Newcastle coal prices from Australia have fallen from around US$150 per tonne three weeks ago to approximately US$130 per tonne last week. This occurred because purchases from China have almost disappeared, while utilities in other Asian countries still hold sufficient stockpiles. The loss of spot demand from China has further weakened the market, with buyers only fulfilling short-term needs and sellers becoming more willing to lower prices. Futures contracts on the SGX also indicate that prices may continue to weaken in the second half of the year, as inventories are expected to remain high through the third quarter.
The Indonesian Coal Market Also Weakens
The Domestic Market Obligation (DMO) and increased supply to PT Perusahaan Listrik Negara (PLN) are still absorbing some of Indonesia’s mid-calorie coal production. Several producers have reported that most of their GAR 5,000 production is now allocated for domestic needs following power supply disruptions. However, this supply limitation is no longer able to hold back the price decline. Buyers from China continue to bid aggressively. Coal previously purchased by traders at high prices is now being sold at a discount. Additionally, expectations that the government will approve additional RKAB production quotas in the second half of the year are also weighing on market sentiment. As a result, Indonesian FOB coal prices have continued to fall across almost all calorific specifications.
Indian Coal Imports Remain Weak
The rainy season in India and abundant domestic coal supply have kept import demand low. Coal India continues to offer large auction volumes, while stockpiles at mine sites remain high, leading power plants to rely more on domestic coal. Imports are now only made for blending purposes or for plants specifically designed to use imported coal. Indonesian and South African coal prices at Indian ports continue to weaken as buyers delay purchases in hopes of further price drops. Sponge iron-based steel producers are also cautious due to weak steel demand, while cement producers have started switching to petroleum coke after international petcoke prices fell by more than US$20 per tonne from their peak in May. Under these conditions, India is now acting more as a price-sensitive importer rather than a main driver of Asian coal demand.
Shipping Freight Rates Also Fall
Shipping freight rates for coal from East Kalimantan to West India continue to weaken due to reduced Indonesian export demand. The route from Richards Bay, South Africa, is also experiencing a decline due to fewer shipping contracts. Meanwhile, freight rates from Australia remain relatively stable, mainly due to limited vessel availability rather than increased coal demand. The decline in ship fuel prices has made transport cheaper, but it has not yet been able to stimulate coal purchasing.
What is the Outlook for Coal Prices?
China has shifted from being a pillar of Asian coal prices to the main factor driving the price correction. The impact has spread to Australia, Indonesia, and India through reduced purchasing activity, weakening freight rates, and falling coal prices in international markets. As long as demand from China remains weak, coal prices are likely to stay under pressure.