China and India are cutting back on coal shipments from Indonesia and shifting to higher-energy coal from other countries.
The move comes as global coal prices drop, making higher-calorific value coal more cost-effective for power generation.
Indonesian coal exports to China and India fell 12.3% and 14.3% respectively in the first five months of 2025, according to data from Kpler. That decline outpaced the overall drop in coal imports by the two countries.
China’s coal imports fell nearly 10% to 137.4 million tons, while India’s declined more than 5% to 74 million tons.
Traders and officials say higher-quality coal is now more attractive because it yields more energy per ton. One million tons of higher-CV coal can replace up to 1.5 million tons of Indonesian low-CV coal.
China is importing more discounted Russian coal, while India is sourcing more coal from South Africa, Colombia, Kazakhstan, and Mozambique. Mongolia and Tanzania have also gained market share.
Australian coal shipments to China are rising, helped by falling benchmark prices. Indonesian and Australian coal indexes have both declined since October 2023, with Australian prices falling faster.
To offset falling exports, Indonesian miners are focusing on domestic demand. Local deliveries are expected to rise 3% in 2025, with exports down about 10%, according to the Indonesian Mining Services Association. Domestic demand, mainly from nickel smelters, is on track to make up the largest share of Indonesia’s coal use in a decade, currently at 48.6%.
Indonesia limits coal prices for power utilities, but smelters pay more. This shift makes smelters a more attractive market for miners trying to manage the export slowdown.
