Asian Coal Hits 2-Year High at $151/Ton as Indonesia Export Rules Snarl Supply

Monday, the price of Australian Newcastle coal futures for June went up 1.5% to $151 a tonne. This was the highest level for a front-month contract during the day since May 2024. Indonesia's new export rules caused confusion and slowed down shipments from the world's biggest coal exporter, which led to the rise. This happened at a time when Northeast Asia's energy needs are rising quickly in the summer.

Indonesia said last month that it would be in charge of shipping important goods like coal. When a new system was put in place in June, it messed up the way travel works and caused delivery delays. Because of the shortage, people thought that coal from Australia would help fill the gap. As a result of backwardation, where prices for the next few months are higher than those for the months after, the Newcastle contract's forward curve has turned into a tighter market.

What Drove the Move: Summer Heat and LNG Disruption

Demand is rising faster. Northeast Asia is getting hotter, which is making more people use air cooling in big markets like China. After attacks on Qatar's biggest export plant and the closing of the Strait of Hormuz, which stopped about 20% of the world's LNG flows, Japan is increasing its use of coal to reduce its reliance on LNG. Bloomberg data shows that Japan, which buys a lot of coal from Australia, has been running its coal-fired power plants faster than they were last year.

If the gas market stays tight, Rystad Energy thinks that Asia's coal use will rise by about 70 million tonnes in 2026. This is because power plants will be using more coal.

The main price for thermal coal in China was 875 RMB/ton on June 8. This is 0.98% more than the beginning of the month. Coking coal prices went up more sharply, by 5.71% per month, reaching 1,712.50 RMB/ton. Since early April, the price of 5,500 kcal thermal coal at ports in the Bohai Rim (the main transport hub) has gone up over 60 RMB/ton. Lower-calorie types have also gone up.

The Supply Picture: Indonesia Delays, Australia Fills In

Indonesia's problems with exports are the main problem right now. China is the biggest coal producer in the world, and the new rules that are slowing down shipments have directly cut off Asian supplies. Prices in Australia also went up and reached their highest level in two years. At the same time, steadily more coal from Xinjiang is leaving the country because it is cheaper and better at what it does. At the same time, transit prices along transportation lines are steadily going up.

Chinese production at home has reacted. Mines that follow the rules have improved their extraction plans and are using their full capacity more. But safety controls and changes to production in some areas have kept the general capacity release rate slow. There hasn't been a big jump in output. Shipping routes in Xinjiang can now carry more goods, which fills in supply gaps in the east and central areas.

Structured divergence can be seen in inventory amounts. Most of the stocks at the big northern ports are still within a reasonable range. Some inland power plants and chemical companies have restocked early, which has caused terminal stocks to slightly rise again. Trading focuses on turning over stock instead of keeping it, so there isn't a big risk of having too much on hand.

$151 is the number in Newcastle that confirms the height of two years ago. The backwardation structure shows that the market values short-term shortage over future supply. This might still be true if Indonesia's export system gets back to normal or if delays last through the summer peak.

The market for coal in Asia is expected to rise by 70 million tonnes by 2026, according to Rystad. Because of problems in the Hormuz Strait and limited supplies in Qatar, the gas market is currently very tight. This makes coal the second most popular fuel for power generation. The fundamental sign is Japan's move from LNG to coal.

The average price for thermal coal in China is 875 RMB/ton. Coking coal prices went up 5.71 percent each month, which shows that demand from the metals industry is also growing. The regions most important signs to keep an eye on are the Bohai Rim port prices, which have gone up more than 60 RMB/ton since April.

Indonesia's export rules set the time for trade. Keep an eye on whether the new regulatory system makes things easier or if Australian supply ends up being the go-to option for Asian buyers. The seasonal change is caused by the summer power peak. Export delays, a heat wave, and problems with LNG all at the same time are great for coal bulls.