India’s wait-and-watch strategy may become procurement risk as global coal markets stabilise

• Global coal prices show early signs of stabilising
• Indian buyers delay imports despite shrinking inventories

After benefiting for much of 2026 from delaying purchases in a steadily falling international coal market, Indian coal buyers may be approaching a critical inflection point. Several leading indicators across the global thermal coal market are now showing signs of stabilisation, while domestic inventories continue to decline gradually, raising an increasingly important procurement question: has the market already found its floor, or is there still room for further downside?

The answer carries significant commercial implications for Indian utilities, cement producers, sponge iron manufacturers and traders. Buyers have so far been rewarded for adopting a wait-and-watch strategy, with international coal prices easing steadily over recent months. However, as China begins to support seaborne prices and suppliers become less willing to reduce offers, the balance of procurement risk may gradually be shifting from waiting for lower prices to risking delayed restocking in a firmer market.

Key takeaways

• International coal markets are showing early signs of stabilisation after a prolonged correction.
• Chinese domestic prices have rebounded, while Newcastle and Richards Bay benchmarks have firmed.
• Indian buyers continue to seek significantly lower prices despite falling domestic inventories.
• The market is increasingly shifting from a buyer’s market to a negotiation over where the next price floor will emerge.

Global markets are no longer sending bearish signals

For most of the first half of 2026, international coal markets moved in one direction. Weak Chinese demand, abundant inventories, comfortable supply and cautious buying steadily pushed prices lower, rewarding buyers that delayed procurement.

That backdrop is now beginning to change.

China’s domestic thermal coal market has recovered over recent weeks as lower rail arrivals, weather-related logistics disruptions and continued mine inspections tightened prompt supply. Traders have returned to the market, sentiment has improved to its strongest level since late April and producers have become increasingly reluctant to lower offers. At the same time, benchmark export prices have also begun stabilising, with higher-calorific-value Australian coal holding firm and Richards Bay FOB 6,000 NAR rising to US$105/t FOB.

Indonesian producers are also showing greater pricing discipline, supported by tighter export availability and reduced willingness to discount prompt cargoes. Rising freight costs have further strengthened delivered prices into Asian markets, reducing the scope for further aggressive price reductions.

Individually, none of these developments confirms the beginning of a sustained bull market. Collectively, however, they suggest that the prolonged downward momentum which characterised much of 2026 is beginning to moderate.

Indian buyers anchored to H1CY’26 market realities

Despite these changes, Indian buyers continue to negotiate on the assumption that further price declines remain likely.

Market participants indicated that buying interest for South African 6,000 NAR coal for August-September loading remains clustered around $98/t FOB, approximately $7/t below prevailing seller expectations.

This gap reflects more than routine price negotiations.

It illustrates the growing divergence between seller expectations, increasingly influenced by improving Chinese sentiment, and Indian buyers, who remain reluctant to accept that the market may be approaching a floor.

For importers, the key question is whether current bids reflect genuine expectations of another leg lower or whether purchasing strategies remain anchored to the market conditions that prevailed during the first half of the year.

Inventory cushion is gradually shrinking

While Indian buyers continue adopting a cautious procurement strategy, domestic inventory trends deserve close attention.

Coal inventories at ports have been declining steadily over recent months as import volumes moderated. Thermal power plant coal stocks have also been gradually drawing down, although they remain within comfortable operating levels. At the same time, domestic coal production growth has normalised after the exceptional expansion witnessed during the previous year.

None of these developments suggests an immediate supply shortage.

However, they do indicate that the inventory cushion supporting India’s cautious buying strategy is gradually becoming smaller.

Historically, procurement strategies built around delaying purchases perform well while prices continue falling. Once markets stabilise, however, delayed buying can result in a concentration of purchasing activity over a relatively short period, potentially increasing competition for prompt cargoes.

Market may be approaching new negotiation phase

The current market is no longer characterised by aggressive producer discounting.

Instead, negotiations increasingly revolve around identifying where the next equilibrium price will emerge.

Producers are pointing to stronger Chinese sentiment, tightening prompt availability and firmer freight costs to justify higher offers. Buyers continue highlighting comfortable inventories, monsoon conditions and uncertain global demand to support lower bids.

The outcome of this negotiation is likely to determine procurement patterns during the remainder of the third quarter.

Outlook

Indian importers have executed their procurement strategy effectively throughout much of 2026, benefiting from a sustained decline in international coal prices and avoiding unnecessary inventory accumulation.

However, the market environment is gradually changing.

While it remains premature to conclude that a sustained price rally has begun, several leading indicators now suggest that the prolonged downward trend is losing momentum. China’s domestic market has stabilised, seaborne benchmark prices are firming and producers across several exporting regions are becoming increasingly resistant to deeper discounts.

Against this backdrop, the principal procurement risk may no longer be whether prices can fall another few dollars per tonne. Instead, it is whether buyers continue delaying purchases until improving international sentiment and declining domestic inventories begin forcing restocking into a firmer market.

For Indian buyers, the coming weeks are therefore likely to be less about identifying the absolute bottom of the market and more about deciding whether waiting for one final price correction is worth the risk of missing the beginning of the next recovery.