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(Bloomberg) — China’s coal importers are ready to turn to alternative supplies if Indonesia’s lower production quotas curb exports, a shift that could undermine Jakarta’s efforts to lift prices and risk alienating its top buyer.
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Some Indonesian miners have suspended spot sales to the international market after the government slashed this year’s output allowances to well below last year’s levels, according to three Indonesia-based traders. The move has fueled speculation that exports could tighten in coming months.
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Chinese traders have already scaled back purchases from Indonesia as a domestic supply glut depresses prices and left imports unprofitable. Some Chinese coal firms have canceled scheduled shipments due to dimming demand, one trader said.
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While Indonesia is China’s largest coal supplier, Beijing has been increasing efforts to diversify supply amid a broader energy security push. Previous attempts by Jakarta to boost prices through supply curbs had already prompted a shift away from the supplier, traders said, while flows from other exporters — like Mongolia or Russia — are expected to fill any gaps left by Indonesia this year.
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“The policies Indonesia has rolled out recently are ill-timed. It’s hard to drive coal prices higher, ” said William Wang, Chief Executive Officer of Morgando International Co., a Singapore-based trading firm. “It’s not a case of naming a high price and buyers automatically accepting it — everyone has other options.”
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Indonesia last month announced plans to cut production quota by about 17% this year in an effort to prop up prices, which have fallen for a third straight year as demand from top consumer China remains subdued. Indonesian coal shipments to China fell for a fourth straight year to 211 million tons in 2025, according to Chinese customs data.
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India, another major buyer of Indonesian coal, is also prepared to weather lower flows. Coal India Ltd.’s stockpiles are near record volumes and the miner is scouting for export opportunities.
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“I don’t think there would be any supply constraints for India,” Tata Power Co.’s CEO Praveer Sinha told reporters on a conference call Wednesday.
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—With assistance from Rajesh Kumar Singh.
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