June 26, 2025 - Fitch Ratings expects the sharp drop in coal prices since 2024 to be sustained over the next three years amid structural demand shifts. This has already put downward pressure on the ratings of some coal producers in Asia (ex-China), though we expect credit profiles for others to demonstrate greater resilience.

Fitch assumes that thermal coal prices will decline further in 2H25. Demand prospects appear relatively weak, particularly in the key export markets of China and India where inventories remain high. Fitch expects prices to trend lower over the next three years, amid demand headwinds from the transition to low-carbon energy sources, notably in China.



We also expect coking coal prices to remain weak over the next three years. This reflects in part a subdued demand outlook for China’s steel sector, amid lingering weakness in construction in that market, which will be only partly countered by new demand from blast furnaces in India and south-east Asia. Challenges to global growth from the US trade war have also raised risks to the outlook for both thermal and coking coal prices.

We downgraded Indonesian thermal coal producer PT Indika Energy Tbk's Issuer Default Rating (IDR) to ‘B+’, from ‘BB-’, with a Stable Outlook, in April, due in part to the effect of low coal prices and high production costs. We also revised the Outlook on Australian coking coal producer Golden Energy and Resources Pte. Ltd.'s ‘B+’ IDR to Negative, from Stable, in May, on elevated leverage due to lower coking coal prices and higher debt following an acquisition. These dynamics will limit the companies’ capacity to lower net leverage.

We have also downgraded Australian coking coal producer Coronado Global Resources (CRN) Inc. multiple times this year to ‘CCC-’. We see a risk that the company will run out of cash by 1H26, unless it is able to secure additional funding. The impact of weak coking coal prices on CRN’s cash flow has been exacerbated by the high costs associated with its assets and persistent operational underperformance. We think the company has some options to boost liquidity within the next six to nine months, via steps such as asset sales. However, these carry significant uncertainty, given the outlook for coking coal prices and global interest rates.

Mongolian Mining Corporation (B+/Stable) has a heavy reliance on Chinese customers for its coking coal, and its vulnerability to economic conditions and regulatory changes in China is a key credit weakness. Low China coal prices may weigh on the firm’s financial performance. Still, MMC completed a major refinancing operation in March 2025, and we believe it has headroom at its current rating level that should cushion against weaker prices, at least in the near term.

Some issuers are diversifying away from the China coal export market, but it will be difficult to offset fully the effect of weaker Chinese demand. In MMC’s case the higher cost of exporting to other markets - given infrastructure constraints - limits its cost-competitiveness. For other companies, the main challenge will be the modest scale of the increase in import demand in countries like India and Indonesia, relative to the fall in Chinese imports. This will also reflect the increase in domestic coal production that we expect in India and Indonesia.

Some issuers are set to diversify away from coal over time. MMC recently acquired 50% of gold and precious metal exploration company Erdene Mongol LLC, for example, and Indika’s reliance on coal should ease once production at its Awak Mas gold mine ramps up from 2027. However, for both companies we expect coal to remain the core revenue driver over the medium term.