Chinese power utilities are turning to domestic thermal coal supplies due to tighter Indonesian export restrictions, which have reduced seaborne availability and made imported cargoes less competitive after rapid price increases.

Some Indonesian mines confirmed a 20-30% year-on-year reduction in their January coal deliveries and over 10% cut from the December 2025 levels, ascribing half the reduction to weather-related interruption and half to RKAB delays, Sxcoal understood. Supply from some small- and medium-sized mines in Indonesia has been nearly frozen due to limited quotas.

"The initially approved RKAB quota for coal is reportedly at some 600 million tonnes, marking a 24-25% decline from the realized production of 790 million tonnes in 2025. The final reduction will be pending on the subsequent approval rounds," said an Indonesian miner source, pointing to potential addition of quotas that could narrow the gap.

Chinese trader sources generally reported scarce supply for prompt cargoes from Indonesia and challenges to commit to new tenders. Delivery to existing awarded tenders, however, proceeded normally, sources confirmed.

One state-run utility reportedly secured five cargoes through a latest tender, including two March-delivery cargoes of 3,800 Kcal/kg NAR coal at 451 yuan/t CFR China with VAT, which nets back to around $51/t FOB for Panamax vessels. The utility was also heard to have bought two cargoes of 3,400 Kcal/kg NAR coal at 393 yuan/t and an Australian 5,500 Kcal/kg NAR coal at 715 yuan/t.

Offers for March-delivering 3,800 Kcal/kg NAR cargoes climbed to $51-52/t FOB on a Panamax basis, a level that increasing Chinese utilities were reluctant to accept.

Some power plants have become increasingly inactive in floating tenders, and certain power plants have even temporarily suspended purchases or canceled tenders as bidding prices surged above their psychological ceilings.

Participants pointed to a possible contraction of demand in China as low-CV coal price edge over domestic supplies disappears.

Sxcoal's estimate on February 4 indicated that Indonesian 3,800 Kcal/kg NAR coal prices exceeded the domestic 4,500 Kcal/kg NAR coal on a delivered to South China and CV-converted basis for the first time in eight months.

On February 5, the CCI index for Indonesian 3,800 Kcal/kg NAR coal stood at $49.5/t FOB, climbing $1.5/t compared with the preceding week. That outpaced rallies in domestic equivalent 4,500 Kcal/kg NAR coal, which rose to 527 yuan/t, up 3 yuan/t ($0.43/t) week on week.

A further deepening of the disadvantage will accelerate utilities' pivot to domestic supplies, some participants warned, as occurred at the end of the first quarter last year, when imports from some major utilities slumped for similar reasons.

Australian coal has gained as well, with offers of 5,500 Kcal/kg NAR coal rising to 715-720 yuan/t CFR South China with VAT and transactions levels to roughly 710 yuan/t.

"Latest FOB offers for Australian 5,500 Kcal/kg NAR coal reach $81.5/t FOB, up from $77-78/t last week," said one Guangdong-based trader source.

Domestic coal underpinned

Sources reported a moderate pickup in inquiries at China's northern ports, especially for 4,500 Kcal/kg NAR coal, due to falling stocks and Indonesian effect spillover. This has slightly pushed offer prices higher.

Some cargoes of Shanxi premium 4,500 Kcal/kg NAR coal were offered at 535 yuan/t, FOB with VAT northern ports, gaining by 5 yuan/t compared with the start of the week. Most sellers anticipated further upward momentum in the near term.

A leading Chinese miner's 4–5 yuan/t price rise at Huanghua port for various third-party coal grades also boosted sentiment, prompting some traders to hold out for further gains.