- Indonesian coal prices firm up on tight supply
- Coal stocks at power plants fall by 9% w-o-w
Indian portside prices of Indonesian thermal coal recorded a sharp increase in the week ending 4 September 2026, as tightening Indonesian supply, declining availability cargoes and a revival in Chinese buying strengthened seller bargaining power.
The move was also reinforced by temporary port closures in Gujarat, slower ground movement and limited prompt cargo availability. 5,000 GAR prices increased INR 800/t w-o-w to around INR 11,600/t at Kandla and INR 11,500/t at Vizag, while 4,200 GAR rose INR 700/t to INR 9,600/t and INR 9,500/t, respectively. At Navlakhi, 3,400 GAR gained INR 600/t to around INR 7,750/t.
Supply disruptions tighten prompt availability
The key driver behind the price escalation remains constrained Indonesian mine-to-port supply. RKAB-related production restrictions, exhaustion of mining quotas at certain producers, and low river water levels disrupting barge movements have reduced the availability of prompt cargoes.
Industry participants also indicate that falling water levels on the Barito River have caused some producers to declare force majeure, while delays in RKAB approvals have further constrained coal movement to export terminals. In India, daily lifting at Navlakhi has reportedly declined to around 16,000 t/day from 25,000 t/day, highlighting the impact of restricted cargo availability.
Mid and High CV availability emerges as a key price catalyst
The sharpest gains were seen across 5,000 and 4,200 GAR grades, reflecting particularly tight availability of mid- to higher-CV Indonesian coal. Limited stocks at Indian ports, coupled with reduced fresh cargo offerings, have increased replacement costs for buyers.
Although monsoon conditions continue to restrain overall physical demand and ground evacuation, low inventories of preferred grades are creating a supply-driven price premium. Consequently, sellers are increasingly quoting fresh cargoes at higher levels, while buyers with immediate requirements are showing greater willingness to secure material despite elevated prices.
RKAB policy keeps Indonesian supply under structural control
Indonesia’s decision to retain the annual RKAB system for 2027, rather than revert to the previous three-year approval cycle, reinforces the government’s objective of aligning coal production more closely with market requirements and maintaining greater control over supply.
The Indonesian government has already indicated that production needs to be moderated from the exceptionally high 2025 level to improve the supply-demand balance and support coal prices. The annual approval mechanism therefore remains a structural factor limiting producers’ flexibility to rapidly increase output when international demand strengthens.
Indian inventories signal tightening fundamentals
Indian thermal coal inventories at major ports declined 2% w-o-w to 13.40 mnt in Week 35, indicating continued evacuation of imported cargoes despite relatively subdued monsoon demand.
More importantly, coal stocks at domestic thermal power plants fell by approximately 9% w-o-w to 27.6 mnt as of 3 September, equivalent to only around nine days of consumption, with nearly 55 plants reporting critical inventory levels. The combination of low plant stocks, domestic dispatch constraints and limited availability of imported preferred grades provides a potential basis for stronger import demand once monsoon-related disruptions ease.
Global Indonesian benchmarks confirm the bullish shift
The strengthening in Indian portside prices is supported by the broader Indonesian market, where FOB benchmarks also moved higher. 5,800 GAR prices increased by around $7-8/t, 4,200 GAR by $2-3/t and 3,400 GAR by $1-2/t during the week. Lower river levels, RKAB-related supply constraints and tighter prompt availability have pushed September-loading 4,200 GAR cargoes above prevailing quoted market levels, indicating stronger buyer urgency for nearby supply.
Outlook
The near-term outlook for Indonesian thermal coal remains firm to bullish, although the pace of gains could moderate if Indian spot demand remains subdued during the monsoon. Tight Indonesian prompt supply, restricted RKAB-linked production flexibility and low Indian power-plant inventories are expected to keep prices elevated. As the monsoon recedes, a recovery in Indian power-sector and industrial demand could trigger inventory restocking and provide additional upside, particularly for 4,200-5,000 GAR grades.
However, sustained price gains will depend on the strength of Chinese buying, the resolution of Indonesian river-logistics constraints and the pace of fresh RKAB approvals. Overall, limited prompt availability is likely to keep the market seller-favoured in the near term, with post-monsoon demand providing the next potential catalyst for further price increases.
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