Indonesia's thermal coal exports hit three-year low amid declining demand from China and India

This decline has significantly impacted global coal exports, potentially leading to the first annual decrease in Indonesian coal shipments since 2020.

Indonesia's exports of thermal coal have dropped to their lowest in three years so far in 2025, dented by weak demand in China and India - the world's two largest coal consumers. The world's largest exporter of coal for power generation shipped out 150 million tons of thermal coal over the first four months of 2025, according to data from commodities intelligence firm Kpler. That was 12 per cent, or nearly 20 million tons, less than what was shipped during the same months in 2024, and marked the biggest year-on-year decline in data going back to the start of 2017. As Indonesia accounts for roughly half of all thermal coal exports, the lower Indonesian shipments have dragged global thermal coal exports lower too, by 7 per cent, or 23 million tons, from January through April compared with the same months a year ago. If the relatively weak pace of coal exports is sustained over the rest of the year, 2025 could mark the first annual decline in Indonesian coal exports since 2020, when the country's coal output and shipments were stalled by COVID-19. Weaker coal import demand from China and India were the main drags on Indonesia's coal exports. China - by far the world's largest coal producer, consumer and importer - cut its purchases from Indonesia by 14 million tons, or 20 per cent, during January to April from the same period last year. Beijing's greater emphasis on boosting local coal mine output, alongside ongoing efforts to reduce air pollution, have been the key drivers behind China's reduced import appetite. World No.2 coal consumer India is also on a domestic coal output push, and reduced imports of Indonesian coal by 15 per cent, or by 6 million tons, during January to April from the same months in 2024. Beyond China and India, other historically large coal importers have also reduced Indonesian coal imports this year. Japan and South Korea imported a total of 13 million tons of coal from Indonesia during January to April, compared to 17 million tons during the same months in 2024. Taiwan, Thailand, the Philippines, Malaysia and Pakistan all also registered declines in year-to-date coal imports from Indonesia. Ongoing efforts to reduce coal use in power production, and the increased generation from clean energy sources instead, has likely helped trim coal demand across Asia so far this year, and could trigger further declines in coal purchases going forward.

Over the first quarter of 2025, coal-fired electricity production across Asia was down 3 per cent from the same months in 2024, data from think tank Ember shows.

However, the weak state of China's industrial economy - which has direct links to trade partners across the region - has also likely played a role in curbing Asia's overall coal use. Weaker Chinese activity throughout its construction sector and heavy industries will have had knock-on effects along its supply chains, which span borders and will have chilled energy-intensive activity in neighbouring nations as well. And with most of Asia's manufacturing sector now set to take a hit from the new higher trade tariffs set by U.S. President Donald Trump, overall industrial activity - and demand for coal power - could decline further in the months ahead. That said, if Asian economies opt to deploy stimulus measures designed to counter the impact of U.S. trade barriers, then greater industrial energy use could result, which could spark a rebound in coal imports and consumption. Not all major coal users have curbed coal consumption and imports so far this year. Vietnam and Bangladesh both lifted Indonesian coal imports to record highs during January to April, and look set to continue boosting coal use and imports going forward to feed their fast-growing energy systems. Other, more developed economies have also stepped up coal imports, in part due to a sharp run-up this year in the price of natural gas, which is another major source of power production in many areas. Spain, Italy, Romania and New Zealand all registered year-over-year rises in imports of Indonesian coal, and higher coal-fired power output. Even the United States has boosted coal-fired electricity output this year by over 20 per cent from year-before levels, Ember data shows. That offers little help to Indonesian coal exporters, however, as the U.S. is a fellow coal exporter. And with China and India both likely to remain only modest coal importers over the coming months, the recent weak pace of Indonesia's coal shipments looks set to be maintained for the near term at least. That in turn raises the prospect of a rare full-year contraction in Indonesia's coal shipments, and a possible peak in global coal export flows.