The Indonesian Coal Mining Association (APBI/ICMA) projects that coal prices will remain stable or stagnant in 2025, continuing the trend seen throughout 2024. This outlook is based on a balanced supply dynamic and strong, sustained global demand.
According to APBI/ICMA Acting Executive Director Gita Mahyarani, China remains the largest export market for Indonesian coal. Despite record-breaking domestic coal production—estimated at around 4 billion tonnes—China continues to rely heavily on imported coal, particularly from Indonesia.
“Even with China’s massive domestic output, their demand for imported coal, including from Indonesia, remains significant,” Gita said on Thursday (19/12/2024).
India’s demand is also expected to stay strong in 2025, driven by its growing energy needs. While India is aggressively ramping up domestic coal production, imports will still play a crucial role in meeting power generation requirements.
Key Challenges: VAT Increase and DMO Compliance
Gita also highlighted challenges currently facing coal producers, particularly the need to avoid oversupply in the market. “Domestically, companies are required to fulfill the Domestic Market Obligation (DMO) of 25% before exporting. This must be prioritised,” she explained.
Another concern is the increase in Indonesia’s Value-Added Tax (VAT) from 11% to 12%, which impacts operational costs across the mining sector—especially in areas like heavy equipment investment, maintenance, and overall operating expenses.
Global Market Overview: Mixed Signals Amid Record Production
According to the International Energy Agency (IEA), global coal prices remain around 50% higher than the average between 2017 and 2019. Coal production is projected to reach an all-time high in 2024, but growth is expected to level off through 2027 due to long-term structural shifts.
International coal trade volume is also set to break records in 2024, reaching 1.55 billion tonnes. However, the IEA expects global trade volumes to decline in the years ahead, with thermal coal facing the sharpest drop.
Asia continues to be the center of global coal trade, with major importers including China, India, Japan, South Korea, and Vietnam, and top exporters being Indonesia and Australia.
Coal Demand Forecast Remains Strong Until 2027
Contrary to earlier predictions, the IEA now forecasts that global coal demand will continue hitting record highs each year through 2027, despite mounting global pressure to reduce fossil fuel consumption due to climate change concerns.
The IEA expects coal demand to rise to 8.77 billion tonnes in 2024 and maintain that level for the next three years, delaying the previously anticipated peak in 2023.
Price Trends: Recent Declines Despite Long-Term Strength
On Wednesday (18/12/2024), ICE Newcastle coal for December delivery closed at USD 128.60 per ton, marking a 1.34% daily decline—the lowest price since April 10. Over the past week, prices have dropped 3.49%, and over the past month, 9.28%. Year-to-date, coal prices are down 12.16%.
Despite recent short-term volatility, long-term fundamentals suggest that coal will continue to play a critical role in the global energy mix—particularly in Asia—well into the next few years.
