China and India Shift Focus from Indonesian to Higher-Grade Coal
China and India, two of the world's largest thermal coal importers, are adjusting their coal procurement strategies by reducing shipments from Indonesia in favor of higher-calorific value (CV) coal from other suppliers. This shift is primarily driven by the global decline in coal prices, which has made higher-quality coal more competitively priced.
The Move Toward Higher-Calorie Coal
Both China and India are increasingly opting for energy-dense coal that produces more energy per ton, despite its higher cost. Higher CV coal, which yields more energy for each dollar spent, is becoming more attractive, especially as the price of lower-grade coal from Indonesia has become less competitive. According to industry experts, one million tons of higher CV coal can replace up to 1.5 million tons of Indonesian coal. In China, lower-calorific thermal coal from Indonesia is facing competition from discounted Russian supplies of similar grades. Meanwhile, in India, imports of higher-grade coal from other regions, including countries such as Kazakhstan, Colombia, and Mozambique, are increasing.
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Regional Coal Markets and Trends
In addition to shifting their focus to higher-grade coal, both countries are increasing purchases from new suppliers. Mongolian coal in China and South African coal in India have seen significant growth, with their shares hitting record highs in the first months of 2025. Tanzania, which had been absent from the global seaborne coal market, has also gained traction, particularly following Russia's invasion of Ukraine. Meanwhile, Australian coal exports are rising in China, further displacing Indonesian shipments.
Impact on Indonesia's Coal Exports
As China and India's demand for Indonesian coal wanes, overall coal exports from Indonesia have seen a decline. In the first five months of 2025, Indonesian coal exports dropped by 12%, with shipments to China and India falling by 12.3% and 14.3%, respectively. This trend is expected to continue unless prices for higher-grade coal rise due to geopolitical factors like the Middle East conflict, which could make Indonesian coal more competitive again.
