International Thermal Coal Market Weakens: Coal Prices Stable but Declining, Indonesian RKAB Quota Uncertainty Shakes Q4 Trends

International energy markets see a sudden shift as August 2026 begins. Following the sharp drop in international oil prices triggered by easing Middle East tensions, the international thermal coal market has cooled over the past week, presenting an overall "weak supply and weak demand" scenario, with major producing regions reporting stable but declining prices. Industry data monitoring shows that the offshore price for Indonesian 3800 kcal/kg thermal coal has fallen to around $65/ton, and the price for Australian 5500 kcal/kg thermal coal at Newcastle port has dropped below $93/ton, showing a clear convergence from the high levels caused by geopolitical conflicts in July. For ASEAN economies that heavily rely on imported coal to support electricity supply, this easing of high international coal prices offers an important window for reducing power costs at the end of the third quarter. Previously, Southeast Asian coal prices surged due to the dual pressure of the Middle East conflict and extreme weather, significantly increasing the cost pressure on regional thermal power plants. Now that both supply and demand are weakening, the market is re-examining the energy cost curve for the second half of the year, creating new dynamics in regional energy trading and procurement strategies. Four Major Producing Regions Face Collective Pressure: Signs of Supply-Side Slack Emerge From the supply side, major global thermal coal export markets have generally been under pressure over the past week, with signs of slack gradually accumulating. Indonesia: Weak Chinese Demand Combined with RKAB Uncertainty Indonesia, as the world's largest thermal coal exporter and a "fuel reservoir" for ASEAN power plants, has particularly critical market dynamics. Data shows that as of July 31, the offshore price for CCI 3800 kcal/kg thermal coal was $62.5/ton, a decrease of $2/ton from the previous month; CCI 4700 kcal/kg was $82.7/ton, down $3.8/ton month-on-month. Spot market bids are concentrated around $65/ton, with some transaction prices above $64/ton. The main reasons for market pressure are twofold: first, weak demand from Chinese buyers—ample port inventories combined with rainfall suppressing power consumption, leading power plants to largely withdraw from the spot market; second, the unresolved revision of the Annual Work Plan and Budget (RKAB) production quotas by the Indonesian government, causing mining companies to generally postpone forward sales. This has widened the gap between buyer and seller quotes, leading to a temporary stagnation in market transactions. Australia: Abundant Supply, Sluggish Asian Demand The Australian thermal coal market continues to be weak. The price for 5500 kcal/kg at Newcastle port has fallen below $93/ton, down approximately $1.5/ton week-on-week; the 6000 kcal/kg price has also dropped below $133/ton. Purchasing interest from major Asian importers is low, and regional inventories are generally ample, leading end-users to adopt conservative procurement strategies. Although some market participants believe that Australian coal prices are nearing a temporary bottom, a substantial rebound is unlikely in the short term before demand shows a clear recovery. Production and transportation in some mining areas of New South Wales have recovered slower than expected due to prior rainfall, but overall supply has not shown significant tightness, further restraining the potential for price increases. Russia and South Africa: Each with Concerns, Weak Exports The Russian market has remained relatively firm, with delivery prices rising due to increased freight rates on the Russia-India route, with the offshore price for CCI Russia 5000 kcal/kg at Far East port reported at $84.5/ton as of July 31. However, high extraction costs in the Kuzbass region, combined with the drone attack on the port of Taman early on July 30, have added another variable to the supply chain stability in the Black Sea region. In South Africa, the offshore price for 5500 kcal/kg at Richards Bay has fallen below $89/ton, with high inventory pressure at major export terminals and insufficient purchasing willingness from India continuing to drag on export recovery.

Uneven Demand: China's Heatwave Meets Indonesia's Rainy Season

The divergence in demand is equally evident. In the Chinese market, spot purchasing activity has been limited due to ample port inventory and suppression from typhoons and rainy weather during the first half of the week; however, as the weekend approaches, heatwaves are returning to East, Central, and Northeast China, significantly increasing cooling electricity demand. As of August 2nd, the coal inventory of the six major coastal power plants stands at 14.374 million tons, with a day-on-hand rising by 2.17% compared to the previous day, and available coal supply has dropped to 15.2 days, leading to increased market expectations for an increase in August imports.

Indonesia, on the other hand, is constrained by the Southwest monsoon rains, leading to a weakening in both power demand and import procurement. With sufficient power plant inventory, import needs are limited to high-quality coal. As of August 2nd, Indonesian power plant coal inventory is 39.219 million tons, with 12.1 days of supply, but 31 power plants are at a critical low inventory level, and subsequent replenishment needs warrant tracking. In Europe, although winter stocking demand provides support, the Rhine and Danube water levels have dropped to extremely low levels of about 30 centimeters, severely restricting barge transportation capacity and significantly diminishing actual receiving capability. Concurrently, Dutch TTF natural gas September futures have fallen to 59.071 EUR/MWh, a 7.19% decrease week-on-week, and the gas price correction has also weakened the substitutive premium for coal.

Indonesian RKAB: A Key Variable for Q4 Supply Elasticity

What investors should pay close attention to is the progress in revising Indonesia's RKAB production quotas, which is becoming the biggest variable in the international coal market for the fourth quarter. According to the latest industry research, FOB prices for Indonesian Q3800 Panamax vessels have risen to 66-68 USD/ton this week, with transaction prices around 65 USD/ton, indicating a clear strengthening of the mining side's willingness to raise prices. Indonesian mining companies have already submitted RKAB revision applications, and this quota will directly affect the elasticity of coal available for export from Indonesia in the fourth quarter.

Furthermore, the Indonesian Ministry of Energy has set the HBA benchmark prices for the first half of August as follows: 124.44 USD/ton for 6322 kcal, 93.27 USD/ton for 5300 kcal, and 65.48 USD/ton for 4100 kcal. Under the dual constraints of limited export surplus and domestic DMO obligations, if the quota policy tightens, the supply elasticity of Indonesian coal will be significantly suppressed, providing a floor support for regional coal prices; conversely, if the quota is increased, it may further open up downward price space.

ASEAN Perspective: How Coal Price Fluctuations Transmit to Power Costs

For ASEAN, coal remains the cornerstone of the regional power structure. The proportion of thermal power generation in countries such as Vietnam, Indonesia, and the Philippines remains high, and the coal price trend is directly related to electricity prices and inflation levels. Previously, the oil and gas supply gap caused by the Middle Eastern conflict led buyers in Japan, South Korea, and Southeast Asia to temporarily increase purchases of high-calorific coal as an energy substitute, keeping international coal prices firm. Now, with the softening of international coal prices at high levels, coupled with the oil price correction resulting from the stabilization of the US-Iran situation, ASEAN energy import costs are expected to experience a phase of relief.

However, analysts caution that the sustainability of this window is uncertain: first, the cooling demand driven by the heatwave in China may lead to the replenishment of imported coal; second, if the Indonesian RKAB quota policy tightens, the supply elasticity in the fourth quarter is worrying; and third, the risk of passage through the Strait of Hormuz has not been completely eliminated, and geopolitical premiums could reemerge at any time. Therefore, ASEAN power companies tend to adopt a dual-track procurement strategy of "locking costs with long-term contracts and capturing windows with spot purchases," while regional energy traders increase hedging and term trading operations around the spread fluctuations.

Outlook: Moderately Weak, Awaiting Clarity in Demand and Policy

Overall, the short-term international thermal coal market is likely to remain stable but weak: there is no significant increase in supply from major producing regions, while demand is counterbalanced by the heatwave in China and the monsoon season in India, and inventory replenishment and low water levels in Europe, lacking the basis for a unilateral price breakthrough. For investors, we recommend focusing on three key signals:

• The approval results of Indonesia's RKAB quotas: These directly determine the elasticity of Indonesian coal exports and the strength of the price floor in the fourth quarter;
• Daily consumption and inventory changes at coastal power plants in China: The degree to which peak summer demand is met determines the replenishment pace of imported coal;
• The evolution of the situation in the Strait of Hormuz: Whether there is a risk of a return to baseline for oil and gas substitution demand and geopolitical premiums.

If the RKAB policy tightens and is implemented, combined with the concentrated realization of peak summer demand in the Northern Hemisphere, coal prices may rise again in the fourth quarter; conversely, if demand remains weak, the coal price center will shift further downward, which will in turn reshape the power costs, inflationary pressures, and earnings expectations of related energy companies in ASEAN, warranting continuous monitoring by regional investors.