The international thermal coal market showed regional divergence over the past week. Indonesian supply was still constrained by drought and quota uncertainty keeping offers firm; South African prices rose on expected demand improvement; Australian prices softened alongside weakening Chinese demand, and Russian coal held at multi-year highs on Turkish demand.

On the demand side, Chinese buyers significantly slowed purchasing activity ahead of the dual holidays, while India continued actively seeking ultra-low-CV and low-CV Indonesian coal amid tight power plant inventories. European coal futures edged lower as Middle East tensions eased and natural gas prices retreated. Overall, market sentiment was dominated by holidays and supply-side disruptions, with demand varying by region.

Supply Side

Indonesia The Indonesian coal market faced multiple constraints over the past week, with persistently tight supply remaining the norm. According to market participants, as of late last week, Indonesian 3,800 Kcal/kg NAR Panamax coal was offered at $76-77/t FOB, with counteroffers mostly around $76/t.

As of September 24, the CCI index for import 3,800 Kcal/kg NAR coal was assessed at $76/t FOB, down $0.5/t from the previous week but up $8.5/t from the same period a month earlier. The CCI index for import 4,700 Kcal/kg NAR coal was assessed at $98/t FOB, down $0.5/t week on week but up $9/t from a month earlier.

Persistent drought in Central Kalimantan and East Kalimantan has lowered river levels, significantly reducing barge operations and vessel loading efficiency, with some miners unable to ship at full capacity. Meanwhile, forest fires near mining areas further exacerbated logistics pressure.

Although a major producer recently secured additional production quota, spot supply has not shown noticeable improvement, and sellers generally maintained firm offers. Due to ongoing uncertainty over the Domestic Market Obligation (DMO) mechanism and the allocation of Work Plan and Budget (RKAB) quotas, miners are cautious about signing long-term contracts for 2027, preferring to sell on an index-linked spot basis.

Notably, the Coaltrans Asia conference is being held in Bali, with core topics focusing on Indonesia's coal export policy direction and market implications. Market participants expect Indonesian domestic supply conditions may improve as the rainy season approaches, but the tight situation is unlikely to fundamentally reverse in the near term.

Russia Over the past week, Russian high-CV coal at Far East ports held at $110-111/t. Trading activity in the Asian high-CV coal market increased somewhat due to reduced Indonesian supply and uncertainty over future price trends.

As of September 24, the CCI index for Russia 5,000 Kcal/kg NAR coal at Far East ports was assessed at $99.5/t FOB, flat from the previous week but up $7/t from a month earlier. The CCI index for Russia 5,500 Kcal/kg NAR coal was assessed at $108/t FOB, flat week on week but up $7/t from the same period a month earlier, touching a new high since mid-October 2023.

Demand from Asian markets remained stable as Russian coal is more competitive than Australian coal, with buyers from South Korea, China and India continuing to purchase. In contrast, Baltic port prices edged down $1-1.5/t.

Turkish power utilities maintained steady inquiries for Russian coal, with most Russian suppliers having sold out their volumes for the year and holding firm offers. The market expects Russian coal price trends after October to continue depending on Middle East geopolitical developments and other factors.

Australia The Australian coal market was relatively stable. Prices for 6,000 Kcal/kg NAR and 5,500 Kcal/kg NAR coal edged up slightly from the previous week amid increased interest in index-linked trades, while mid-CV coal softened as Chinese buyers stayed on the sidelines.

As of September 25, Newcastle port 5,500 Kcal/kg NAR coal held at around $107.5/t, up about $0.2/t week on week. The 6,000 Kcal/kg NAR coal price was basically flat from the previous week, holding at around $143/t.

The New South Wales Independent Planning Commission (IPC) postponed its decision on the Hunter Valley Operations expansion project to September 30. The project would extend the operating life of two thermal coal export mines. Glencore and Yancoal Australia expressed disappointment over the delay in a joint statement.

South Africa Last week, South African 6,000 Kcal/kg NAR coal continued to retreat from a recent three-year high. As of September 25, the price for South Africa 5,500 Kcal/kg NAR coal at Richards Bay was assessed at below $104/t FOB, down nearly $2/t from the previous week. Meanwhile, South African 6,000 Kcal/kg NAR coal fell about $2/t to around $121/t FOB.

Driven by holiday-induced slowdowns in India, sponge iron producers paused import buying, prompting noticeable offer concessions as nearly all suppliers traded standard South African coal below index levels. Nevertheless, demand from Pakistan and Bangladesh remained stable amid tight Indonesian supply. Some South Korean power utilities were also seeking South African cargoes to replace more expensive Russian and Colombian coal.

In addition, severe weather temporarily disrupted loading operations at South Africa's main coal export terminal, causing some port inventory buildup, but the impact was limited and operations resumed promptly.

Demand Side

China Over the past week, Chinese thermal coal purchasing interest continued to weaken in the seaborne market. With the Mid-Autumn Festival and National Day holidays approaching, domestic power utilities gradually reduced buying activity, with tender volumes far below other overseas markets such as India.

As of September 24, the CCI index for import 3,800 Kcal/kg NAR coal at China southern ports was assessed at $88/t CFR, down $0.5/t from the previous week. The CCI index for import 4,700 Kcal/kg NAR coal was assessed at $109/t CFR, down $0.5/t week on week. The CCI index for import 5,500 Kcal/kg NAR coal was assessed at $129/t CFR, flat from the previous week.

Last week, as the dual holidays approached, domestic power utilities reduced imports of seaborne coal, with purchasing interest continuing to weaken. Market participants expected Chinese buyer demand to become clearer only after the holidays, though it will still depend on domestic coal price recovery and power plant inventory levels.

Recently, policy directives urging regional miners to increase output to ensure supply further dampened buyers' near-term purchasing decisions. Meanwhile, a major Indonesian producer securing additional mining quota also accelerated the flow of seaborne low-CV coal into the Chinese market. As Chinese buyers' overall purchasing interest weakened, demand for Australian coal also slowed, with buyers preferring to wait for further price corrections rather than book new cargoes.

India

Last week, Indian buyer interest strengthened slightly, but buyers remained resistant to high premiums. Power plant inventories were at critically low levels, and insufficient rainfall supported electricity demand, with demand concentrated in low-CV and ultra low-CV Indonesian coal.

Data from India's Central Electricity Authority (CEA) showed that as of September 27, coal inventories at Indian power plants stood at 21.85 million tonnes, down 4.51% from the previous week. Days of coal cover fell below 7 days, compared with 7.3 days a week earlier. On that day, 82 power plants were at critically low inventory levels, up 7 from the previous week.

Premiums for mainstream Indonesian low-CV coal remained firm, and buyers were willing to pay higher prices. Trading activity further heated up toward the end of the week, but end users traded in smaller parcels rather than full cargoes, reflecting caution over the sustainability of current price levels. Meanwhile, direct reduced iron producers and power plants continued to prefer South African low-CV and mid-CV coal over more expensive alternatives.

In contrast, import coal prices at India's west coast strengthened due to insufficient monsoon rainfall, rising international coal prices and higher freight rates, with traders raising domestic retail prices accordingly.

Europe

Over the past week, European coal offers continued to edge lower tracking natural gas price movements. Natural gas prices fell sharply on progress in Middle East negotiations and expectations of warmer weather, dragging coal prices lower.

As of late last week, Europe ARA 6,000 Kcal/kg NAR coal was assessed at around $134/t CFR, down $4/t from the previous week.

Last week, Dutch TTF natural gas prices fluctuated lower. As of September 25, the ICE TTF benchmark Dutch natural gas October 2026 futures closed at 72.07 euros/MWh, down 9.4% from 79.52 euros/MWh a week earlier.

Natural gas and oil contract prices fell sharply as the market expected U.S.-Iran talks to resume and the Strait of Hormuz to reopen. Additionally, Germany recently submitted a roadmap to the United Nations General Assembly committing to a complete phase-out of coal, oil and natural gas by 2045. All coal-fired power plants must cease operations by 2038, with generation gradually reduced in the interim.

Currently, European ARA port coal inventories are ample, and power utilities have completed fourth-quarter restocking, leaving buyers with little incentive to chase prices higher. However, as gas-fired generation costs remain higher than coal-fired, coal consumption at power plants still has some support, and winter demand is expected to hold up.