Asia's seaborne thermal coal imports shifted to downturn in September, due to an excess of supply and weak demand among major importing countries during the seasonal shoulder month.

Notably, China's thermal coal market is moving toward balance as the country adopted multiple measures to adjust domestic supply. Although its seaborne imports may dip from the 2024's high, coal demand from power sectors would help balance supply, offering a glimmer of hope for the weak market.

Demand divided across Asia

Asia's total seaborne thermal coal imports stood at 75.07 million tonnes in September, dropping 4.55% year on year (YoY) and 6.61% month on month (MoM), according to Kpler's cargo-tracking data.

Among this, China imported 27.91 million tonnes of seaborne thermal coal in the month, down 5.88% YoY and 5.53% MoM, the data showed.

The drop was due to the interplay of the supply-demand dynamics on the country's thermal coal market following the elevated coal stocks and domestic oversupply in the first half of 2025, according to Kpler's monthly report. On the supply side, the country's raw coal output slid on year, impacted by rainfalls in major producing areas, such as Shanxi, Shaanxi and Inner Mongolia, as well as stricter safety checks and overproduction restrictions.

On the demand side, the country's coal-fired power output in August grew on the year for the first time in 2025, due to weaker-than-expected hydropower output and slowed renewable additions. Meanwhile, coal stocks at northern ports retreated from record highs earlier in the year to a seasonal normal level, reflecting easing oversupply concerns on the domestic market.

China's seaborne thermal coal imports are expected to decrease in the fourth quarter compared to the same period in 2024, given the relatively high level in the preceding year.

In September, India imported 12.3 million tonnes of thermal coal, down 6.48% YoY yet up 7.88% MoM, according to the Kpler data.

The country's coal demand remained weak due to monsoon. Procurement appetite was subdued by stock build-ups and weak industrial activities. Specifically, the power sectors' coal inventories stayed ample, and sponge iron makers reduced imports from South Africa due to squeezed profit margins.

It is worth noting that Indian importers are reducing purchases of Russian coal amid geopolitical pressures, while increasing coal imports from the U.S.

Following the summer peak season, Japan's thermal coal imports dropped from August's high of 11.07 million tonnes to 8.35 million tonnes in September. This marked a decrease of 17.71% YoY and 24.6% MoM.

However, unexpected shortages in nuclear power supply—due to factors including delayed reactor restarts—may boost thermal power generation demand in the short term. More importantly, coal retains a cost advantage over natural gas in the country, ensuring its share in power generation.

South Korea imported 7.44 million tonnes in the month, climbing 21.37% YoY yet dropping 18.61% MoM. Kpler's report indicated that South Korean buyers' excessive procurement of Russian coal over the past several quarters may have exceeded the government's recommended import quota ceiling. Consequently, Russian coal imports are expected to slow in the fourth quarter. This shift may create market opportunities for coal from other sources, particularly Colombian coal.

Additionally, Vietnam imported 3.41 million tonnes of thermal coal in September, dropping 1.08% YoY but soaring 3.83% MoM. The country's import demand is expected to grow due to the commissioning of new units at the Vung Ang II power plant. However, as recent typhoon damage to its coal storage facilities may require months to repair, coal-fired power generation may be limited in the short term. Meanwhile, the Philippines maintained stable import demand due to increased domestic production and weak electricity consumption.

Supply: Russia to slow, Indonesia to grow

Russia's supply remained the primary cause of market weakness. Its thermal coal exports stayed at elevated levels in the third quarter, reaching record highs to destinations like South Korea, which directly suppressed global thermal coal prices. However, as winter approaches in the Northern Hemisphere, mining and logistics operations in some Russian regions are expected to slow, potentially leading to a decline in its seaborne thermal coal exports from current highs.

In contrast, Indonesian coal exports showed growth momentum amid tightening domestic supply in China. Despite disruptions from rainfall in Kalimantan, Indonesia's coal exports in September exceeded expectations. Kpler's data indicate the country's coal outflows in October to stabilize above 43 million tonnes, driven by winter stockpiling at some Chinese power plants and anticipated restocking purchases from India.

Although the Indonesian government suspended approximately 190 mining permits, including about 90 for coal miners, the impact on actual production remains limited as most of these mines are still in the exploration phase.

Additionally, in September, Colombia's coal exports reached a three-month high due to robust Asian demand. Despite recurring security-related incidents, coal shipments to Asia rebounded significantly, driving an overall increase in exports.

Prices: may grow in winter, but still face pressures

Market participants widely consider the current seaborne market conditions to be unsustainable, as coal prices have fallen below the production costs of many miners. Kpler anticipated a potential rebound in seaborne thermal coal prices, particularly during the winter of 2025-26. This forecast stemmed primarily from supply-side adjustments, notably substantial production cuts by Colombian producers. However, the magnitude of this rebound is likely to be limited.

In the short term, seaborne coal prices—especially European ARA thermal coal prices—will remain under pressure due to Russia's oversupply and weak natural gas prices. In the Asia-Pacific region, Australian Newcastle FOB prices have shown relative resilience, supported by coal's high share in Asia's energy mix and stable demand for premium Australian coal from Japan and South Korea.

Overall, the Asian thermal coal market is currently in a critical transition phase. Its near-term trajectory will hinge on the actual demand during the Northern Hemisphere winter and whether major suppliers like Colombia and Indonesia will implement substantial supply cuts under fiscal pressures.