Indonesia’s thermal coal benchmarks strengthen on supply constraints, export uncertainty

• • Restricted availability boosts high-CV coal prices

• • Firm utility demand supports mid- and low-CV prices

Indonesia’s Harga Batubara Acuan (HBA) thermal coal benchmarks recorded a broad-based increase across all calorific value (CV) categories during the first half of July 2026. The price appreciation was primarily driven by tightening spot availability, consistent demand from Asian power utilities, and increasing uncertainty around Indonesias evolving coal export regulations and domestic supply obligations.

The firming trend reflects a gradual shift in market dynamics, with buyers becoming more active amid concerns over near-term supply availability, particularly for Indonesian-origin coal.

High-CV coal prices rise on limited export availability:

The benchmark price for 6,322 kcal/kg GAR coal increased by nearly 2% to $126.58/t in the first half of July compared with the second half of June, reaching its highest level in almost a year.

The upward movement was supported by restricted spot availability of premium-grade coal, as miners remained cautious regarding export commitments amid policy uncertainties and domestic supply priorities. Strong buying interest from utilities seeking higher-efficiency fuel sources also contributed to the price recovery.

Mid-CV coal reaches record levels on strong utility demand:

The HBA-I benchmark (5,300 kcal/kg GAR) witnessed the strongest gain among all coal categories, rising by approximately 3% to $90.94/t during the first half of July compared with the previous half-month period.

The index reached its highest level since inception, supported by increased procurement activity from cost-sensitive Asian power utilities. Mid-CV coal continues to attract demand due to its balance between calorific efficiency and affordability, making it a preferred fuel option for utilities managing input costs.

Lower-CV coal maintains momentum on fuel cost optimisation:

Lower-calorific coal benchmarks continued their positive trajectory, with HBA-II (4,100 kcal/kg GAR) rising by nearly 4% to $62.59/t, while HBA-III (3,400 kcal/kg GAR) increased by around 2% to $41.91/t.

Both indices reached record highs, reflecting strong demand from price-sensitive markets, particularly where utilities are focusing on fuel cost optimisation through blending strategies. The competitiveness of lower-CV coal compared with alternative fuel sources has supported sustained buying interest despite quality limitations.

Indonesia approves coal production quota for 2026:

Indonesia’s Ministry of Energy and Mineral Resources (ESDM) has approved more than 600 million tonnes (mnt) of coal production under the 2026 Work Plan and Budget (RKAB), indicating a gradual relaxation of earlier production constraints.

The approved volume is higher than the previously approved 580 mnt quota in March 2026, although it remains significantly below the 790 mnt produced in 2025. The governments cautious approach reflects its focus on balancing export earnings, domestic energy security, and long-term resource management.

Domestic market obligation (DMO) restricts export availability:

Indonesia’s thermal coal market continues to experience supply-side pressure due to increasing focus on fulfilling the Domestic Market Obligation (DMO), particularly from state power utility PT PLN (Persero).

Market participants reported tighter availability of mid-CV coal at domestic stockpiles due to lower RKAB allocations, stronger export economics compared with domestic pricing, and delayed payment cycles affecting smaller producers.

To address supply shortages, the Indonesian government has directed major coal producers to prioritise domestic deliveries, particularly for power generation requirements. Several miners have reportedly increased domestic supply commitments, reducing availability for the spot export market.

Key market drivers

1. 1. Tightening spot availability: Reduced exportable surplus due to production controls and higher domestic allocation requirements has supported benchmark price increases.

1. 1. Export policy uncertainty: Potential adjustments in Indonesias coal export framework, including possible restrictions on certain export volumes, have encouraged buyers to secure supply ahead of possible disruptions.

1. 1. Domestic supply prioritisation: Higher emphasis on meeting PLNs coal requirements has reduced availability for international markets, tightening prompt cargo supply.

1. 1. Cost optimisation by utilities: Utilities continue to favour Indonesian coal grades that offer competitive economics through blending and fuel efficiency strategies.

Market outlook:

Indonesia’s thermal coal market is expected to remain firm on constrained spot availability, steady regional demand, and ongoing uncertainty around export policies. While the approval of higher production quotas may provide some relief to supply conditions, the impact is likely to be gradual as miners adjust production and domestic commitments.

Mid-CV and lower-CV coal segments are expected to remain comparatively resilient due to continued demand from cost-sensitive utilities. However, any further relaxation of production limits or improvement in domestic stock availability could moderate price gains in the coming months.

Overall, the market outlook remains balanced with upside risks from supply constraints and policy developments, while increased Indonesian production availability could limit further price escalation.