International coal prices surpass $140 per ton: Indonesia increases production, domestic coal prices rebound during the off-season

As international coal prices rise, Indonesia plans to expand coal production.

Indonesian Coordinating Minister for Economic Affairs, Airlangga Hartarto, recently stated that President Joko Widodo has instructed officials to revise the 2026 annual production quota, aiming to increase the country’s coal output. Airlangga also revealed that the government is reviewing coal export taxes and intends to raise the rates in line with the increase in international coal prices.

Indonesia is the world’s largest thermal coal exporter, accounting for about half of global exports, with over 60% of its exports going to China and India. Data from the Indonesian Coal Mining Association show that in 2025, the country’s actual production was 790 million tons, with exports of approximately 540 million tons, down 5.5% and 7.9% year-on-year, respectively.

Prior to this policy shift, the Indonesian government had adjusted its coal policies twice. In January 2026, Indonesia planned to reduce the annual coal production quota from 790 million tons in 2025 to 600 million tons, a decrease of about 18%. At the same time, it planned to resume coal export taxes starting January 1, ending nearly 20 years of tax exemption.

At the beginning of the Middle East conflict, President Joko Widodo stated that Indonesia would not export related products until domestic demand was met, to ensure the security of national energy and essential commodity supplies. He emphasized that Indonesia’s rich natural resources must be maximized for the benefit of its people, and that resource management policies should prioritize national interests.

Due to the continued rise in international coal prices, Indonesia’s coal policy has recently shifted again. As of March 16, the spot price of thermal coal at Port of Newcastle, Australia, was $135.67 per ton, up $20 from the beginning of the month. The Intercontinental Exchange (ICE) Newcastle coal futures for the next month closed at $146.5 per ton on March 20.

Recently, the increase in international coal prices has begun to influence the domestic coal market. Data from Wind shows that as of March 20, the spot price of 5,500 kcal thermal coal at Qinhuangdao Port was 735 yuan per ton, a 9.21% year-on-year increase and a 0.82% weekly increase. The reference price for Bohai Rim thermal coal was 737 yuan per ton, up 0.14% week-on-week. During the traditional off-season for thermal coal consumption, domestic coal prices have started to rebound.

Open Source Securities believes that current thermal coal prices are still at historically low levels, providing room for a rebound. With supply-side policies targeting overproduction driving output reduction, and demand gradually entering peak season, the coal supply and demand fundamentals are expected to continue improving. Cinda Securities states that although the off-season for electricity coal consumption and continuous inventory accumulation at northern ports since March pose challenges, railway maintenance in April may slow down inventory buildup. Coupled with inverted costs for imported coal and resilient demand for coal in chemical industries, upward price movement remains possible.

Currently, Indonesia’s policy adjustments have not yet been implemented, and details such as the extent of quota increases and specific export tax rates are still to be announced. Airlangga did not mention any changes to domestic market obligation rules (DMO) when announcing increased production. Under current regulations, coal companies are required to supply about 25% of their annual output domestically at a capped price of $70 per ton, but since February 2026, some companies have been asked to raise this proportion to 30%.

CICC analysts believe that domestic coal prices may follow international trends, but given Indonesia’s strong energy supply capacity, domestic coal prices might rise less than overseas. Based on historical oil-to-coal price ratios, there is a risk that domestic thermal coal prices could break through 1,000 yuan per ton, though actual prices will depend on domestic energy security efforts at that time.

(Article source: The Paper)