As global coal demand is set to stagnate following a record high in 2024, Indonesian coal producers are pivoting towards non-traditional markets in a bid to sustain exports, Kontan reported on July 28.

The International Energy Agency (IEA) projected global coal consumption to grow only marginally by 0.2% in 2025, and a decline below 2024 levels by 2026. This stagnation is largely attributed to a shift towards renewable energy sources in major coal-consuming nations and an uptick in their domestic coal production.

Gita Mahyarani, acting executive director of the Indonesian Coal Mining Association (APBI), highlighted that Indonesia's key export markets have traditionally been concentrated in Asia, including China, India, Japan, South Korea, and Southeast Asia. However, these countries are increasingly reducing their reliance on imported coal as they enhance local production capabilities.

"China and India are currently pushing to increase domestic production. While they still consume substantial amounts of coal, their strategy is clear: reduce imports and rely on local resources," Mahyarani stated.

Finding new markets poses significant challenges for Indonesian miners, who must navigate varying demand profiles across countries while competing against other coal-exporting nations such as Russia and Australia. "The U.S., for instance, has seen a rise in demand due to high gas prices, but they also produce their own coal," she added.

Mahyarani said earlier on July 24 that coal exports from Indonesia to China is likely to continue falling till the end of the year, and overall coal export performance in the third quarter is forecast to be better than the fourth quarter.

Hendra Sinadia, executive director of the Indonesia Mining Association (IMA), noted the decline in demand from China stems from abundant coal stocks resulting from increased domestic output. "Import levels may be decreasing, but it's important to recognize that China's electricity consumption continues to rise," Hendra added.

Historically, around 98% of Indonesia's coal exports over the past decade have been directed towards Asian markets. However, with demand weakening and production ramping up in these countries, Indonesian producers are now compelled to explore diversification strategies for their export markets.

Some miners are diversifying supplies to some ASEAN and several South Asian countries, according to Mahyarani, but she expects the increase in exports to these alternative markets will not compensate for the lost quantity from Indonesia's two largest destination – China and India.

The IEA's forecasts suggest that global coal trade will see its first decline in 2025 since the 2020 Covid-related downturn, with this trend expected to persist into 2026. Despite stagnant demand, global coal production is anticipated to reach new heights next year, primarily driven by increases in output from China and India.