- Supply tightness supports prices across regions
- Demand outlook remains cautiously positive
The global thermal coal market presented a complex picture of cautious optimism and subtle realignments in trade flows as the first quarter of 2026 came to a close. Prices across key hubs remained largely firm, though some divergence emerged, shaped by geopolitical tensions, uncertain supply fundamentals, and the persistent influence of freight rates on regional competitiveness.
Atlantic basin: Prices correct as physical-paper gap narrows
Benchmark CIF Amsterdam-Rotterdam-Antwerp (ARA) prices of 6,000 kcal/kg NAR coal corrected notably on 31 March, falling $3.00/t to $114.05/t. The move coincided with a narrowing gap between physical spot and financial paper, as aggressive spot offers dissipated and prompt paper softened. Market focus shifted towards longer-term contracts, with increased interest in Cal 27 positions. Trading in Europe was expected to remain quiet with many traders on Easter holiday.
Supply-side developments in Colombia reinforced underlying support. Thermal coal exports fell 13% w-o-w to 937,708 t, with Cerrejon shipments dropping 39% following infrastructure attacks, highlighting supply chain vulnerability.
Asia: Cautious optimism amid Indonesian supply constraints
Asian sentiment remained cautious, though buyer interest emerged in anticipation of summer demand. NEAT index for 5,750 kcal/kg NAR coal inched up to $117.86/t on 31 March. Interest centred on Indonesian mid- and high-CV coals, with buyers from India, Bangladesh, and Vietnam seeking 4,200 kcal/kg GAR and 5,000 kcal/kg GAR grades. Trading remained limited amid uncertainty over Indonesian production.
Indonesian supply constraints dominated the narrative. While RKAB approval visibility improved, many mines received allocations significantly below requests, with one producer reporting a 40% reduction for two of its mines. These constraints, combined with domestic market obligation (DMO) requirements, kept a floor under prices. FOB Kalimantan 4,200 kcal/kg GAR held steady at $60.00/t. Daily exports showed signs of recovery, averaging around 1 million tonnes (mnt) over five days, though remaining below 2025 averages.
Australian coal gains on softening freights, renewed interest
Australian prices faced upward pressure, driven by softening freight rates and renewed interest from India and China. Offers for FOB Newcastle 5,500 kcal/kg NAR were heard at $89.50-$90.00/t for H2 April loading, with bids firming around $88.00/t. Indian interest increased, though a bid-offer disparity remained as buyers expressed uncertainty about future demand. Japanese buyers remained structured around term contracts, limiting spot market impact.
Freight rates reshape regional competitiveness
The interplay of FOB prices and freight rates reshaped regional arbitrage opportunities. International freight rates lost ground overall, directly impacting landed costs. Panamax freight from Richards Bay to India West eased, as did rates from Kalimantan to India, enhancing competitiveness for these origins.
For China, the competitive landscape shifted. Russian mid-CV coal extended its advantage, while Indonesian mid-CV coal re-emerged as a competitive option. Conversely, South African and Colombian coals were priced out due to higher delivered costs. Australian coal, while still at a premium, saw its advantage diminish.
In India, Russian 5,500 kcal/kg NAR and Indonesian 4,200 kcal/kg GAR coals were neck-and-neck as the most competitive options, intensifying competition for market share. In Pakistan, a strong gas-to-coal switching trend accelerated coal consumption amid higher gas prices.
Economic fundamentals support demand in key nations
Underpinning trade flows were strong economic fundamentals in key consuming nations. Chinese coal consumption for January-February rose 3.5% y-o-y. The power and cement sectors showed recovery, while chemicals exhibited the strongest growth. Coal consumption at China’s top six thermal power plants was up 5% y-o-y, drawing down stocks below seasonal averages. This domestic demand narrowed the price gap with seaborne cargoes, improving import attractiveness.
In Japan, thermal coal imports rose marginally y-o-y in February, though below forecasts. Cement production showed modest gains, providing steady industrial demand. Australian and US deliveries increased, while South African supplies dropped significantly.
Outlook: Short-term positivity with downside risks
As the market navigates the second quarter, the interplay of geopolitical risk, supply discipline from key producers, and freight rate volatility will dictate price direction and trade flows. The narrowing gap between physical and financial markets suggests a period of recalibration as participants weigh short-term supply tightness against medium-term uncertainties.
The outlook for high-CV coal remains positive in the short to medium term, though the market remains exposed to a potential downward correction. Mid- and low-CV coals maintain a positive outlook, supported by sustained Southeast Asian demand and ongoing gas-to-coal switching. With focus shifting to longer-dated contracts and key consuming nations showing resilient demand, the global thermal coal market enters the new quarter with cautious optimism, tempered by supply disruption risks and geopolitical volatility.
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