Indonesia Export Curbs Add a Second Bullish Layer to Asian Coal
Newcastle coal futures' retreat from June peaks masks a domestic supply constraint that could outlast any Middle East ceasefire.
Newcastle coal futures for June delivery hit $148.75 a tonne on 8 June (2026-06-08), their highest in nearly two years, as Indonesia's new export regulations delayed shipments just as summer power demand was building across Asia.7 Physical prices have since eased — Newcastle coal settled at $113.35 a tonne on Monday (2026-06-29) — but the demand that drove the initial move has not reversed. If anything, it has broadened.
The underlying shift began when Strait of Hormuz disruptions cut around 20% of global LNG flows, including attacks on Qatar's Ras Laffan complex.6 Japan and South Korea, two of the world's largest LNG importers, responded by increasing coal burn. Japan's gas-based electricity supply in April 2026 fell to its lowest level in two years, according to market data cited by Kyodo News.5 The return to coal was not a brief emergency measure; utilities rebuilt coal procurement and reactivated capacity that had been running on reduced margins.
"The longer this war continues, the more shifts we will see," said Andre Lambine, an electricity analyst at S&P Global Energy, quoted by Kyodo News.5 The observation cuts to the core of the demand outlook: there is no natural demand ceiling until LNG supply normalises.
China added a third pull on seaborne coal markets. Total power generation rose an estimated 6.6% year-on-year in April 2026, with weak wind conditions, subdued solar output and extended nuclear refuelling outages forcing coal power higher for the fourth consecutive month.3 Crude oil imports fell around 20% year-on-year and natural gas imports fell roughly 13% year-on-year in the same period, as Hormuz disruptions constrained Chinese energy imports. China's first-quarter thermal power commissioning surged more than 160% year-on-year to a record, a policy response to the supply vulnerability exposed by the war.3
European demand added to the picture, though the mechanism is different. EU thermal coal imports were on track for a five-month high in April, at 2.27 million tonnes — up 25% from March and 10% year-on-year — according to provisional Kpler vessel-tracking data.1 Colombian supply dominated, rising 48% from March to 1.12 million tonnes. The European move reflects gas price hedging rather than structural fuel switching: utilities stocking up against further LNG-linked gas price spikes.
European gas has stayed elevated enough to keep coal competitive. ICE Endex TTF front-month was trading at €41.91 on Tuesday (2026-06-30), after earlier rising more than 20% from end-of-Q4 levels above €26 per megawatt-hour.4 A further 3% rise was recorded on Thursday (2026-05-21) when concerns emerged that a US-Iran peace standoff could delay any resumption of Middle East LNG flows.2 At these TTF levels, coal remains in the European generation merit order in markets where it has not yet been fully phased out.
What distinguishes the current coal market from earlier geopolitical spikes is the layering of independent constraints. The Indonesia export curbs are a domestic regulatory decision with their own timeline — separate from diplomatic progress on the Strait of Hormuz. Even if a ceasefire removes the LNG supply risk premium, the Indonesian supply disruption does not automatically reverse, and Asian demand that has shifted toward coal will not unwind overnight.
Analysts flag the persistence risk. LNG prices, while off their post-disruption peaks, remain well above pre-war levels, maintaining the economic incentive for coal burn across Asia.6 The rate at which Qatar restores full loading operations after any settlement — and how quickly Asian buyers can renegotiate term contracts — will determine how quickly gas competes back against coal for baseload. Until that happens, the Newcastle prompt remains supported by demand that has proven less elastic than the initial shock implied.