Coal Market Dynamics: Production Challenges and Supply Constraints in Australia and Indonesia

The global coal market is experiencing significant shifts, with production challenges and supply constraints emerging in key producing regions like Australia and Indonesia.

Australian Coal Production Highlights

Yancoal Australia reported record ROM coal production of 67.0 million tonnes in 2025, a 7% increase from the previous year. Despite this production growth, the company experienced a 13% decrease in revenue, dropping to $5.95 billion, primarily due to a 17% decline in realized coal prices.

Market Segmentation and Pricing

The coal market shows nuanced dynamics across different segments. Indonesia is moving to reduce thermal coal production, with mining quotas expected to fall by around 25% compared to the previous year. This reduction could potentially disrupt global supply chains and impact pricing.

Supply Challenges in Indonesia

Coal-fired power plants in Indonesia are facing critical inventory levels, with most facilities having stockpiles sufficient for less than two weeks of operation. Joseph Pangalila from the Indonesian Private Power Producers Association noted that coal inventories currently cover only around 10 days of consumption, signaling potential supply disruptions.

Market Pricing and Regional Variations

In the Chinese market, coke and coking coal prices show regional variations. First-grade metallurgical coke with dry quenching is priced at 1,790 yuan/mt, while quasi-first-grade varieties range from 1,350 to 1,650 yuan/mt.

Conclusion / Bench Energy View

The coal market is experiencing complex dynamics with production growth in some regions contrasted against significant supply constraints in others. Reduced production quotas, low inventory levels, and price volatility suggest a challenging environment for coal producers and consumers in 2026.