- Chinese restocking fuels coal price rally
- Indonesian supply squeeze tightens market
After a subdued start to the second quarter, the Asian thermal coal market regained significant momentum in the first week of May 2026. This shift was driven by a confluence of demand-side recovery and persistent supply constraints. Prices across major grades and origins moved higher as Chinese buyers returned from the May Day holidays and Indonesian miners faced high operating costs and production quota uncertainty.
Chinese demand resurfaces, Low-CV grades lead the charge
The most significant driver of the recent upswing has been the return of Chinese end-users and traders. Following the week-long holiday period from May 1-5, buyers actively sought Indonesian low-calorific value (CV) coal, particularly 3,000-4,700 kcal/kg NAR, drawn by favorable import arbitrage and expectations of a hotter-than-usual summer.
Between April 24 and May 8, domestic markers for 5,500 kcal/kg NAR rose from $113.62/t to $121.19/t, while 6,000 kcal/kg NAR rose from $130.15/t to $138.03/t. By May 8, the 5,500 NAR grade for delivery into South China reached $120.40/t. Offers for Kalimantan 4,200 GAR were heard as high as $63-$67/t FOB for Panamax vessels , up from $61.50/t just one week earlier.
Market participants noted that while restocking is underway, power plants remain price-sensitive due to strong hydropower output, which may limit aggressive price chasing.
Indonesian supply constraints worsen
On the supply side, Indonesian miners faced mounting pressure. High fuel prices and uncertainty over mid-year production quota (RKAB) renewals limited spot cargo availability. Several producers prioritized domestic market obligation (DMO) sales, further tightening the export market.
On May 8, the benchmark for 4,200 GAR was assessed at $62.00/t , with bids heard between $60-$61/t and offers reaching $65.50/t. For branded low-CV cargoes (3,400 GAR), trade indications reached $42.45/t FOB on a Supramax basis. Producers have noted that while demand from Vietnam, South Korea, and the Philippines remains strong, they cannot always guarantee volumes for June delivery.
Australian high-CV coal firm on diversified demand
Australian coal also saw gains, with 5,500 NAR FOB Newcastle assessed at $99.00/t on May 8 , up from $96.50/t earlier in the week. Offers for June-loading Panamax vessels were heard between $102-$104/t. South Korean utilities and Vietnamese buyers have been active in seeking Australian mid-to-high CV coal for blending. Supply remains balanced rather than oversupplied due to heavy rainfall-related disruptions earlier in the year.
India: Cautious but present
Indian demand remained firm but selective as buyers explored alternatives from Russia and South Africa. Coal stocks at Indian power plants stood at 53.76 million t as of May 6-sufficient for over 17 days of consumption-though several plants are operating with critical stock levels. On May 8, 5,500 NAR delivery into West India was valued at $108.25/t.
Outlook
The market is expected to remain bullish through the summer restocking period, with forward expectations for June and the third quarter trending higher. While buyers are resisting the highest offers, sellers currently hold the advantage due to supply deficits and ongoing geopolitical risks. The next two months will determine if this is a sustained recovery or a temporary seasonal spike.
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