By Ulf Bergman
As summer gives way to autumn across much of the Northern Hemisphere, coal gains in prominence. In all likelihood, the seasonal interest in the fossil fuel will get a boost this year. An increasingly volatile situation in and around the Strait of Hormuz continues to disrupt the flow of crude oil and natural gas from the Middle East and has seen Brent again topping 100 dollars per barrel, pointing to further gains across energy prices more broadly. Still, higher demand for coal as buyers seek to diversify their energy mix may not automatically translate into more of it becoming available. Hence, coal prices may follow Brent and WTI higher.
Coal Prices on the Rise
Since late June, global coal prices have been trending higher, fuelled by robust demand and supply concerns. These developments have largely mirrored crude oil and natural gas markets, which have been trading significantly higher over the past few months in often volatile conditions. At this stage, there is precious little to suggest that the disruptions to the seaborne trade through the Strait of Hormuz will end anytime soon. Hence, the global appetite for coal will be solid in the coming months. However, demand may be tempered by further price gains as supplies look set to be stretched.
The October coal futures for delivery in the Australian port of Newcastle, which broadly acts as a benchmark for the Asian market, have advanced from 126 dollars per tonne in late June to just over 150 dollars per tonne in recent days. The gain of around twenty per cent brought the contracts within a whisker of the year's high set at the end of March. Compared to the same time last year, the Newcastle contracts are currently trading around thirty per cent higher, highlighting the impact of disrupted crude oil and LNG flows.
Similarly, the coal futures for delivery in Rotterdam next month have surged from 107 dollars per tonne during the final week of June to around 141 dollars in recent days. The more than thirty per cent gain has propelled the contracts to price levels not seen in nearly three and a half years. The contracts have been supported by European natural gas prices reaching the highest levels since December 2022 amid low inventories across the continent and concerns over supplies. Hence, a temporary, and likely limited, revival for the fossil fuel is on the cards in Europe, adding to the robust outlook for demand.
Slow Start for Seasonal Rebound in Seaborne Coal Exports
August typically marks a ramp-up in seaborne coal exports after weakness in July, as economic activity in the Northern Hemisphere picks up after the summer and buyers start planning for colder weather and the heating season. While export volumes rose in August compared with July, the month-on-month growth was modest. According to data from Signal Ocean, global seaborne coal export volumes were 2.9 per cent higher in August than during the preceding month. The growth rate was approximately half of what was recorded for the same periods in 2024 and 2025. Additionally, last month’s aggregate was 2.6 per cent lower than during August 2025 and 1.7 per cent below the reading for the same period in 2024.
In an attempt to exert control and benefit from a dominant position, Indonesia has imposed export controls on commodities shipped from the country. As a result, Indonesian coal exports have declined year on year every month except June since the beginning of the year. The downward pressure on volumes was especially significant last month, with August’s aggregate 24.4 per cent lower than a year ago, based on Signal Ocean’s data. According to recent reports, the Indonesian government wants the country to be a “price influencer” on commodities, suggesting exports will not rise materially in the near term. Still, even if the approach works in the short to medium term, buyers may, where possible, seek supplies elsewhere.
In contrast to top exporter Indonesia, second-largest coal shipper Australia has recorded rising shipments throughout much of the year. While July was an exception, seaborne exports rose by 6.5 per cent in August compared with the same month a year ago. During the past eight months, Australian coal exports rose by 5.5 per cent, offsetting around 57 per cent of the Indonesian reduction. Last month, Australian coal exports bound for China rose by more than forty per cent, compared with both a year ago and July.
Among the other exporters, Russian shipments remained broadly in line with the volumes a year ago following two months of robust growth. US exports have grown significantly year-on-year since April, while South African shipments stabilised in August after three months of export growth. Canadian coal shipments picked up somewhat in August, but year-to-date volumes have fallen 2.6 per cent short of last year’s. For Colombia, the data may look promising at first glance, with volumes higher than last year. Still, it is a recovery from a low base, with year-to-date exports 16.1 per cent lower than in 2024.
Indonesian Coal Is the Key to Price Developments
Even if other producers offset much of the reduction in Indonesian exports, the quantities involved suggest that prices may rise in the coming months as global supplies tighten. The development may prompt Indonesian authorities to allow more of its coal to be shipped overseas. However, given the time lags in the seaborne coal trade, such a development would take time, and in the short run, prices are likely to have more upside.
For dry bulk shipping, robust demand for coal amid Indonesian export restrictions should contribute to increasingly sub-optimal trade flows as buyers seek replacement supplies from often more distant locations. Hence, even if supplies remain tight, tonne-mile demand may receive a boost. Still, some prudence may be called for as soft year-to-date seaborne exports bound for China suggest weaker demand. Also, while Australian shipments to China have risen in recent months amid lower Indonesian volumes, Russian exports shipped from Far East ports have tempered the impact on tonne-mile demand.
Data source: Ocean Analytics