Indonesia's Coal Exports Sink 23% as Global Demand Heads for a Record

Indonesia, the world's largest exporter of thermal coal, has seen a 23% drop in coal shipments in August compared to the same period last year, according to the Jakarta Post. The reduction in exports is due to tightening global coal markets and uncertainties surrounding Indonesia's coal mining and exporting policies. The government has imposed production quotas on coal miners, and these quotas have fluctuated throughout the year, causing uncertainty among buyers.

Furthermore, the strong El Niño weather pattern has reduced rainfall and lowered river water levels, disrupting the movement of coal barges to export ports.

The global demand for coal is on track for a record high this year due to disruptions in natural gas supply from the Middle East. As a result, countries are turning to coal as an alternative energy source. Matthew Boyle, head of research at trader Ashon International DMCC, predicts that Indonesian coal sales this year will likely be lower than 2 million tons, compared to around 4 million tons last year.

The International Energy Agency (IEA) expects Indonesia's coal output to fall by more than 12 million tons in 2026, or by 1.5% from 2025. This decline in output is attributed to the government's target of 641 million tons, which is significantly lower than the previous year's production. The IEA highlights the uncertainty surrounding Indonesia's coal policies, including discussions over export taxes, revenue-sharing arrangements, mining permits, and the potential centralization of exports through a state-controlled entity.

These factors further exacerbate the uncertainty faced by both producers and international buyers in the Indonesian coal market.