Indonesia export curbs and LNG squeeze drive Asian coal prices higher

Indonesia export curbs and LNG squeeze drive Asian coal prices higher Jakarta's supply restrictions and a war-driven LNG disruption have pushed Asian utilities back to coal, tightening a seaborne market the largest exporter is deliberately squeezing. The Coal ETF climbed 1.85% on Tuesday (2026-06-09) as Indonesia's export restrictions tightened seaborne thermal supply just as disrupted LNG shipments forced Asian utilities back toward coal-fired power.¹ Indonesia is the world's largest thermal coal exporter, and it has moved to restrict shipments in an effort to lift prices, China's main coal industry body said. At the same time, war-related disruption to LNG supply routes has driven Asian spot gas prices higher, making coal the cheaper option for power plants across the region.^1,4 The China Coal Transportation and Distribution Association cut its 2026 import forecast to 465 million tons on Monday (2026-05-18), down from a projection of 480 million tons about three weeks earlier, citing the Indonesian curbs. Beijing could lift domestic output to fill the gap, the association said.¹ But the pullback from seaborne coal is uneven, and not all of it traces to Jakarta. China's coal imports fell to 38.73 million metric tons in April, down 6% from 41.38 million tons a year earlier, customs data show. Weak demand and high port inventories drove that decline, with analysts pointing to a strategic pivot toward self-sufficiency.^7,5 The switching elsewhere in Asia is putting a floor under prices. The region's largest LNG importers increased coal-fired generation from April through early May as gas cargoes were delayed or cancelled and prices surged in global markets, industry data show.^6,4 That shift is unfolding while Indonesia's public finances tighten. Last year's fiscal deficit, at 2.9% of GDP, was the country's largest excluding the pandemic, alarmingly close to the 3% cap imposed by law since 2003. Low prices for exports such as coal, nickel and palm oil dented tax revenue, which fell 3% in 2025 against an assumed 7% rise.³ That pressure helps explain Jakarta's willingness to intervene in the coal market. The government subsidises fuel and electricity, a measure it had expected to cost $12bn this year before oil prices jumped, so higher global energy costs cut both ways for the budget.³ The coal pivot carries a cost beyond fiscal arithmetic. "The shift will impose substantial environmental and public health costs," said Dinita Setyawati, senior energy analyst at Ember. Other analysts argue the crisis could ultimately accelerate the region's shift toward renewable energy, even as emissions rise in the near term.² For now, traders are watching two things. The first is whether Indonesian export controls tighten further as the fiscal year wears on and the deficit ceiling looms. The second is how quickly disrupted LNG flows resume. Wood Mackenzie cut its forecast for Asian LNG imports to about five million metric tons from 12.4 million tons, assuming a two-month supply disruption, implying coal's demand boost is not a one-month blip.^1,4 The unresolved risk runs through China. If utilities there prove unwilling to pay up for seaborne coal as port inventories stay high, weak import demand could overwhelm Indonesia's supply management and undercut the revenue gambit. With LNG still tight and Asian coal-fired generation rising, the market is for now betting Jakarta holds the stronger hand.^5,4