Indonesia’s proposal to route exports of key commodities through a centralized, statelinked entity has added a new element of uncertainty to the thermal coal markets, where regional demand has been firm, participants told Platts, part of S&P Global Energy.

In a parliamentary speech May 20, Indonesian President Prabowo Subianto detailed plans to establish a state-backed body overseeing exports of key commodities, including coal and palm oil, as part of efforts to strengthen control over natural resources and lift government revenue, Platts reported.

While the government has yet to provide much guidance on how the framework would operate in practice, the initial response from the Asian coal market has been cautious.

So far, the market expects that existing spot contract cargoes will continue to load and ship as normal, and that contractual deliveries will be met. The more immediate impact, however, has been felt in market behavior rather than physical flows. Spot activity has slowed, with traders, producers and buyers showing hesitation in committing to new deals while awaiting clearer policy direction.

Participants said the uncertainty is centered on how export procedures, pricing oversight and contractual arrangements might change if exports are routed through a governmentbacked mechanism. Bid and offer activity has thinned in recent sessions, with some counterparties pausing negotiations until there is more clarity on the proposed structure and its implementation timeline, traders said.

"The miners are not offering cargoes on spot, which means they don't want to add any new contract. They may take a few days and wait for the official circular," a Jakarta-based large trader said.

Indonesian coal, accounting for around half of yearly seaborne coal volumes at about 500 million metric tons, plays a key role in balancing supply for major Asian consumers, including India, China and countries across Southeast Asia. As a result, even the perception of tighter administrative control or reduced commercial flexibility can have an outsized impact, particularly in the spot market where liquidity can already be limited.

At this stage, concerns appear to be focused more on operational uncertainty than on expectations of direct government control over pricing, sources said. Indonesia’s coal exports have traditionally operated through a decentralized system, with miners, traders and overseas buyers negotiating directly across a wide range of coal grades, delivery windows and pricing formulas.

"Any move toward a more centralized export channel naturally raises questions about execution speed, flexibility in cargo allocation, counterparty risk and overall efficiency," an Indonesian miner said.

Market participants are uncertain whether the state-nominated entity will just remain as an administrative or oversight body, or whether there will be deeper interference, such as decisions on pricing ranges and contractual terms. The second possibility could affect how prices are negotiated and how outlier transactions are treated, mainly during periods of volatility, another trader said.

There are also concerns around any transition period. Smaller and midsized producers could face challenges adjusting to new administrative processes, particularly if approvals, payment mechanisms or export nominations become more centralized.

Centralized export framework

At the same time, market participants recognize that Indonesia’s broader policy direction has, in recent years, moved toward greater state oversight of strategically important resources. From the government’s perspective, a centralized export framework could help improve revenue collection, strengthen monitoring and provide better visibility over commodity flows.

Market participants held firm offers and bids May 21. Conversations centered on just indicative values for most grades of thermal coal exported from Indonesia. Prices have already increased this year in response to the government's earlier announcement to curb coal production in 2026.

Platts assessed the Kalimantan 4,200 kcal/kg GAR coal grade at $64.75/metric ton May 21, up from $45/mt levels at the start of the year, while Kalimantan 5,800 kcal/kg coal rose to $103/mt May 21 from $80/mt levels during the same period.

"If deals are signed for July-loading cargoes today, no one knows what shape it's going to take. Whether the fresh trades will have to be routed via the state export firm, or can be directly executed, is still a question," the Indonesia-based miner said.

As per the President's announcement, export transactions and overseas contracts will be gradually transferred to the designated state entity between July and August. Starting Sept. 1, all export and import transactions with foreign buyers will be handled entirely through the state-owned enterprise.