Indonesian coal output, exports decline in 2025 | Latest Market News

Indonesia’s coal sector posted its first contraction in five years in 2025, as softer demand from China and India and persistently low prices pressured both production and shipments. Government data compiled by the Indonesian Coal Mining Association (ICMA) show total output at 790mn t, with about 514mn t exported. Production fell 5.5 percent year over year and exports declined 7.9 percent, although output still topped the official target of around 740mn t.

First annual drop since 2020

The decline breaks a run of growth since 2020, when the pandemic disrupted both demand and supply chains. In 2025, the pullback was driven largely by Indonesia’s two biggest customers, China and India, where higher domestic coal availability and softer consumption curbed import needs. The shift reflects both cyclical economic softness and a gradual reduction in coal-fired power’s share of the generation mix in these markets.

Prices at multi-year lows squeezed margins

Producers recalibrated output as benchmark prices slumped. Industry assessments put the widely traded GAR 4,200 kcal/kg coal for Supramax vessels at $44.99/t fob Kalimantan on 24 December 2025—down about 71 percent from the October 21, 2021 peak of $154.21/t. Prices touched a more than four-year low of $39.40/t in June 2025 and have since hovered in a narrow band that some miners say barely covers cash costs. The weak pricing environment has reinforced a cautious production stance heading into 2026.

Policy moves tighten supply outlook

Coal supply may remain constrained as Jakarta weighs production cuts and potential policy changes, including an export duty on coal—steps that could inject fresh uncertainty into the seaborne market. The government is considering a 2026 output target below 700mn t. Energy minister Bahlil Lahadalia said on 8 January that final figures will be determined after evaluating domestic needs.

Indonesia’s domestic market obligation (DMO) requires miners to sell at least a quarter of their output locally. DMO sales reached 254mn t in 2025, with end-year stocks at 22mn t, according to government data compiled by ICMA. Authorities have signaled they will prioritize mining quotas to meet DMO volumes before setting allowable production for exports.

Additional 2025 measures aimed at tightening supply included keeping export sales proceeds in onshore bank accounts, adjustments to the domestic coal reference price (HBA), the rollout of mandatory biofuel blending norms, restrictions on coal hauling in parts of South Sumatra, moves to impose an export tax on coal, and a reversion to annual RKAB (work plan and budget) approvals with stronger compliance requirements on mine reclamation.

Seaborne market remains well supplied

Despite Indonesia’s pullback, the global seaborne market appears adequately supplied. Robust domestic output in China and India is likely to cap import demand in the near term, compounding the effects of slower economic growth and evolving generation mixes that favor renewables over coal during periods of weaker electricity demand.

China and India demand trends

China’s economy—the world’s largest source of coal imports—is projected to slow to 4.4 percent growth in 2026 from an estimated 4.9 percent in 2025. At the same time, China continues to raise the share of renewables in its power mix, further pressuring coal burn. In India, coal consumption was subdued through much of 2025, weighed down by an extended monsoon and increased renewable generation. A sharp depreciation of the rupee during 2025 also made imports costlier, damping buying interest.

What to watch

• Indonesia’s final 2026 production target and any formal announcement of export duties or tax changes.
• Implementation of DMO prioritization and its impact on export availability.
• Price trajectories for GAR 4,200 kcal/kg coal and whether margins stabilize enough to support higher output.
• China and India import behavior, particularly in response to domestic stock levels, hydropower availability, and renewable generation growth.

With prices subdued, policy tightening in Indonesia, and major buyers relying more on domestic supply and renewables, the global coal market enters 2026 with a cautious tone. Indonesia’s decisions on production caps and export policy, alongside shifting demand in Asia, will be pivotal in shaping trade flows and price stability over the coming year.