September 13, 2025 - Over the past week, European thermal coal indices continued to decline below 92 USD/t amid oversupplies and weak shoulder season demand.

Last week, German Chancellor Merz, advocating for restoring the country’s industrial competitiveness, stated the need to slow the decommissioning of remaining coal-fired capacity until gas power plants capable of replacing them are built. As of 10.09.2025, coal stocks at ARA terminals slightly decreased to 3.46 mio t (-0.02 mio t w-o-w).

South African High-CV 6,000 dropped below 84 USD/t, reaching their lowest level since February 2021. Market participants believe fundamental factors will remain negative at least until mid-2026. Subdued demand from India (due to the monsoon season, high coal stockpiles, and an upcoming tax change) is putting pressure on prices.

No reduction in coal exports or redirection to the domestic market is observed. South Africa’s domestic market of 9 mio t/year has faced supply difficulties since record-high prices in 2022, when export prices reached 448 USD/t FOB.

The South African government announced it would start negotiations with several companies to act as private freight operators on the Transnet rail network. Companies are expected to commence operations between 2026-2028. The goal is to improve the efficiency of the transport system?(which has long suffered from locomotive shortages, maintenance delays, copper cable theft, and vandalism) and increase total rail freight volumes from current 160 mio t/year to 250 mio t by 2030.

In China, spot prices for 5,500 NAR coal at the port of Qinhuangdao corrected downward to 96 USD/t. The Chinese coal market is currently under pressure from seasonally lower consumption. Specifically, Shenhua reduced its FOB rates at Huanghua port by 0.70-4.92 USD/t depending on the material’s calorific value. In key mining regions, many companies cut prices by an average of 2.82 USD /t.

Most market participants expect downward pressure on prices to persist until spot prices align with contract prices, which currently stand at 94.80 USD /t FOB for 5,500 kcal/kg NAR coal.

Chinese authorities are implementing measures to control domestic coal production amidst a weakening market. These measures include moving part of the additional capacity approved since 2022 (to ensure power system stability during peak demand) back into reserve. The total volume of this “reserve” capacity is estimated at over 200 mio t/year.

Coal mining enterprises must align their output with market demand. Major coal companies will be required to reduce their production plans.

Coal inventories at China’s 9 largest ports fell to 22.29 mio t (-0.18 mio t w-o-w).

In India, end-users showed limited interest in imported material due to stable domestic supplies, weak industrial activity, and heavy rains in several northern regions (Punjab, Haryana, Rajasthan), which negatively impacted sentiment. A representative from a cement company stated that the monsoon had reduced capacity utilization to 50-55% from initial plans of 80%. Consequently, the company’s existing raw material stocks might last until year-end.

Reduced inquiries for imported material are also linked to an upcoming change in the Goods and Services Tax (GST) structure. The tax increase, effective September 22, will apply an 18% tax rate to coal instead of 5%. However, the fixed levy of 400 Indian rupees per t (4.54 USD/t) will be abolished, offsetting the tax hike.

Experts estimate that the greatest benefit from the tax revision will go to lower-quality domestically produced coal. Estimated costs for local fuel could drop by about 20%.

For power plants and brick kilns (buyers ineligible for tax credits) using imported coal, these changes will increase fuel costs by 5-9%. These enterprises will likely seek to increase their reliance on domestic supplies.

Conversely, for cement, steel, and sponge iron producers, the new tax regime will reduce the cost of Indonesian 3,800-5,000 GAR coal by 6-8%, and South African 5,500 NAR coal will become 5-6% cheaper.

Reportedly, traders are holding about 3.0 mio t of unsold coal at east coast ports, with the fixed levy (4.54 USD/t) already paid. End-users are reportedly in no rush to buy, as they won’t be able to claim it back (as tax credits). Some buyers with urgent needs are negotiating with suppliers to share the burden of the levy for deliveries before September 22.

The Indonesian 5,900 GAR index firmed to 75.75 USD/t, while the price for low-CV 4,200 kcal/kg GAR edged down to 42 USD/t.

Heavy rains in East and South Kalimantan are negatively impacting mining output and complicating shipments to ports, causing delays of 3-5 days. Additionally, the inter-seasonal period has reduced buyer activity for Indonesian material.

Australian high-CV 6,000 coal dropped below 102 USD/t due to limited demand, despite ongoing heatwaves in the Pacific region.

Notably, Japan experienced its hottest summer in 127 years of records, with temperature in Tokyo reaching 35°C on September 8.

However, the heat had less impact than expected on Japan’s spot demand for thermal coal, attributed to growing solar power generation (Japan’s current installed solar capacity is 90 GW).

On the other hand, market participants report that several Newcastle shippers have already sold out their Q4 2025 volumes, leaving little material available on the spot market. Meanwhile, port congestion at Newcastle continues to worsen: as of September 8, 105 vessels were waiting to load, compared to 85 on September 1.

The Australian HCC metallurgical coal index bounced back to 187 USD/t. Several Indian consumers are showing interest in Australian HCC, linked to the need to restock after the monsoon season.

The third Indian Steel Association Metallurgical Coal Summit was held in Delhi on September 8-9. Amid an unpredictable geopolitical environment, shifting trade flows, and mounting margin pressure on the Indian steel industry, steel companies reiterated their intentions to diversify coking coal sources to manage volatility from over-reliance on a single supplier. For instance, Tata Steel has established six sites in India to test new coal grades.

Statistics show that in the first eight months of 2025, India imported 54.5 mio t of metallurgical coal. Australia accounted for 26.4 mio t (48%), Russia for 13.3 mio t (24%), the USA for 6.7 mio t (12%), and Mozambique for 4.2 mio t (8%).

Chinese buyers show restrained interest in purchasing imported material, expecting further price declines for metallurgical coal and coke.

Traders note that significant volumes of Canadian and Australian material imported during the previous procurement round remain unsold, limiting interest in new purchases. However, some market participants remain optimistic about demand for domestic coal.