Indonesia’s coal exports set for further drop in 2026 after 2025 decline - APBI-ICMA

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Indonesia, the world's largest thermal coal exporter, is implementing strategic production cuts, reducing coal exports by 7.9% in 2025 and planning a further 24% reduction in 2026 to support global coal prices.

Market Context: Indonesia's Coal Export Landscape

Indonesia's thermal coal export strategy represents a critical inflection point in global energy markets, signaling a deliberate governmental approach to managing supply-side dynamics. The planned production cuts from 514 million tonnes in 2025 to approximately 600 million tonnes in 2026 demonstrate a sophisticated market intervention mechanism.

Historical Production Trends

Since 2020's COVID-19 disruptions, Indonesian coal exports have undergone significant transformations. The 7.9% year-on-year decline in 2025 marks the first substantial reduction in overseas shipments, indicating a strategic pivot in national energy policy.

Regional Market Implications

These production cuts will have profound implications for key Asian markets, particularly China and India, which rely heavily on Indonesian thermal coal. The supply reduction is expected to create upward pressure on global coal pricing mechanisms and potentially reshape regional energy procurement strategies.

Supply Chain Dynamics

The planned reduction will impact global shipping routes, particularly in the Asia-Pacific region. Freight rates, port logistics, and long-term supply contracts will need to be recalibrated to accommodate this significant market shift.

🧭 Bench Energy Expert View

What this means: Indonesia is strategically positioning itself as a price-maker rather than a price-taker in the global thermal coal market. By constraining supply, the government aims to stabilize and potentially increase coal prices, protecting domestic producer revenues.

Market Impact Analysis:

• Price Implications: Expected 8-12% increase in thermal coal benchmark prices (Newcastle, Rotterdam indices)

• Supply Chain Effects: Potential 5-7% increase in freight rates for Panamax and Capesize vessels

• Regional Dynamics: China and India will likely seek alternative sources, potentially increasing spot market volatility

• Trading Opportunities: Short-term futures contracts and regional coal producer equities may see increased investor interest

Risks & Opportunities: While the production cut aims to support prices, it also risks accelerating global decarbonization efforts and potentially pushing more aggressive renewable energy investments in target markets.