Trump Brings Cheer to Indonesian Coal Producers

Coal prices remain buoyant amid a surge in oil prices and strong demand. According to Refinitiv, coal prices closed at US$134.5 per tonne on Tuesday (21/7/2026), up 0.56%. This increase extends a positive trend, with prices strengthening by 3.07% over the last four days. Yesterday’s closing price was also the highest since 17 June 2026, or in more than a month. The rise in coal prices is underpinned by oil prices and demand. Oil prices soared to US$91 per barrel, a record high since 10 June 2026. Oil prices have also shot up 8% in three consecutive days. Coal and oil are substitute commodities, so their prices influence each other. The National Coal Council (NCC), which advises President Donald Trump’s administration, has urged the US Department of Energy (DOE) to provide support in the form of loan guarantees and grants to maintain the operation of existing coal-fired power plants and build new ones. During a meeting in Washington, the NCC submitted 19 recommendations, including increased investment in coal infrastructure, power purchase agreements (PPAs), and the removal of various regulatory barriers to the construction of coal-fired power plants. The Trump administration has also shifted the focus of the DOE’s financing institutions to support the coal industry revival agenda, including pushing for the repeal of greenhouse gas emission rules for coal-fired power plants. In 2025, coal accounted for about 17% of US electricity production, while coal production rose 3% to around 528 million tonnes. S&P Global estimates that the Asian seaborne metallurgical coal market will enter the third quarter of 2026 as the China-led price rally begins to fade. Import demand for premium coking coal in China is weakening due to abundant port stocks and recovering domestic production. Market players are now shifting their attention to India as the next potential demand driver. In the second quarter, premium coking coal prices surged to US$265 per tonne, the highest since March 2024, triggered by a mine accident in Shanxi that disrupted domestic Chinese supply. However, the price increase is expected to be difficult to sustain as Chinese coal production recovers and steel demand remains sluggish. Meanwhile, India is expected to increase purchases only towards the end of the third quarter after the monsoon season. During the second quarter, Indian buyers relied more on long-term contracts and existing inventories, while coke imports remained high, especially from Indonesia. Market participants assess that the direction of coking coal prices in the third quarter will depend heavily on whether China resumes increasing imports and whether India begins actively buying on the spot market. Sxcoal reported that the Chinese metallurgical coke market weakened earlier this week after several large steel mills in Hebei Province requested a price cut for coke. The move aims to shift cost pressures upstream as steel mills’ profit margins continue to shrink. Previously, coke producers were able to maintain prices due to coking coal supply disruptions. However, the bargaining power has now reversed as steel demand weakens and steel mill profitability becomes increasingly pressured. Several major steel producers have proposed a coke price cut of CNY 50 per tonne. If implemented, this would be the first price decline since the rally began in June. Steel demand has weakened due to the summer season reducing construction activity, while steel production remains high. This condition has squeezed steel producers’ margins, prompting them to pressure raw material prices, including coke. Meanwhile, coking coal supply is recovering as more mines in Shanxi resume operations after being halted for safety inspections, reducing concerns over raw material shortages. Coke inventories at some plants are also rising as deliveries to steel mills slow down. As a result, coke producers are finding it increasingly difficult to maintain prices and may have to accept further price reductions.