Three supply shocks in three weeks: Why coal stocks are running hot
China has idled 11% of its met coal output, Indonesia is nationalising exports and India wants imports back. Coal's setup is tightening fast
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KEY POINTS
- Beijing has halted mines covering about 11% of China's domestic met coal output after the Liushenyu disaster, and UBS expects a front-loaded price spike as the seaborne market is running near balance
- Indonesia will route thermal coal, palm oil and nickel exports through a state entity under sovereign wealth fund Danantara from September, adding policy risk to the world's largest thermal coal exporter
- India's steel ministry is pushing to scrap anti-dumping duties on met coke imports after volumes fell 21% in 2025, adding seaborne demand just as summer power burn and Asia's gas shortage lift coal consumption
Coal stocks are hard to love, weighed down by the 'dirty coal' stigma, net-zero ambitions and the brutal Queensland tax regime. But in the space of a few weeks, China, Indonesia and India have each delivered a policy or supply shock that tightens the market, just as Northern Hemisphere summer demand kicks in.
Coal stocks have already moved on the news, with most names up 10-20% in the past month.
Ticker | Company | % Chg | Price | 1 Month | 1 Year |
|---|---|---|---|---|---|
CRN | Coronado Global | 13.7% | $0.31 | 11.6% | 167.0% |
WHC | Whitehaven Coal | 3.2% | $9.55 | 11.6% | 73.2% |
YAL | Yancoal Australia | 2.2% | $7.18 | -4.8% | 36.7% |
NHC | New Hope Corporation | 1.5% | $6.13 | 11.5% | 65.2% |
SMR | Stanmore Resources | 1.2% | $2.90 | 26.4% | 51.6% |
Data as at Thursday, 2:00 pm (Source: Market Index)
China's mine disaster
On 22 May, a gas explosion at the Liushenyu coal mine in China killed 82 workers. Authorities immediately halted 25 mines in the Qinyuan region, amounting to 26 million tonnes of annual production. A further 109 underground metallurgical coal mines in Shanxi were ordered to stop output for two to seven days for inspections.
UBS estimates these mines represent 122 million tonnes of capacity, or roughly 11% of China's domestic met coal output.
A study of six comparable mine disasters going back to 2016 found met coal prices typically rise 3–5% in the 10 to 30 days after an incident, as inspection-driven supply cuts work through the market. The analysts note that events in May, September and October, when restocking and industrial activity pick up, produced larger and more persistent gains. Liushenyu is a May event.
UBS argues the setup this time is tighter than the historical playbook, as the seaborne met coal market is sitting near the top of the global cost curve, with demand of ~268 million tonnes against supply of ~269 million tonnes at US$241 a tonne. With that little slack, even a small Shanxi disruption can push prices along the steep end of the curve.
Over the coming weeks, the investment bank expects:
Port inventories draw down first
Seaborne import demand rises at the margin
Prices spike as the curve steepens
Indonesia seeks to nationalise commodity exports
President Prabowo Subianto told lawmakers in Jakarta last month that the government will take control of the country's commodity exports, starting with palm oil, thermal coal and nickel.
Prabowo claims Indonesia loses up to US$150 billion a year to practices such as under-invoicing, arguing that "we must set our own prices".
Sales will eventually run through a government-appointed exporter under sovereign wealth fund Danantara. Exporters must report sales to the new entity from 1 June, and it will handle contracts, shipping and payments for strategic commodities from September.
Indonesia is the world's largest thermal coal exporter, so any friction in how those tonnes reach buyers is material for seaborne prices.
India wants its met coke tariffs gone
India's Ministry of Steel last month asked the finance ministry to withdraw anti-dumping duties on low-ash metallurgical coke imports, citing thin domestic supply and rising prices.
Met coke imports fell 21% to 3.81 million tonnes in 2025, and state-run steelmaker RINL reported a 20% rise in input costs because it could not source enough coke domestically at workable prices.
The demand side is stacking up into summer
Behind the three supply shocks sits an increasingly strong demand backdrop.
India hit temperatures of 40–45 degrees in spring and was already running coal plants flat out
Japan suspended restrictions on older coal plants until 2027
South Korea has removed its 80% coal-fired generation cap
Analysis from the Oxford Institute adds that missile damage to Qatar's Ras Laffan LNG complex means Asian gas availability stays impaired even if the Strait reopens, keeping the gas-to-coal switch alive beyond any geopolitical resolution
China is ramping coal-to-chemicals output as a substitute for lost Gulf naphtha and LPG, with Inner Mongolia alone holding 30.7 million tonnes a year of methanol capacity
The IEA said in its World Energy Investment report that "confidence in the reliability of transit through the Strait of Hormuz has been profoundly shaken," hardening energy-security thinking across Asia, which buys 80-90% of Gulf oil and gas exports.
The agency also noted mixed coking and thermal projects are becoming more attractive as slow progress on blast furnace alternatives supports coking coal demand.
The bottom line: Compounding catalysts have driven a sharp move for local coal names, with Whitehaven on the cusp of breaking out to a fresh three-year high and New Hope trading at its highest since October 2023. Interestingly, UBS expects the met coal move to be front-loaded and to mean-revert over time as the market rations demand rather than rewards producers. The market loves a squeeze, the question is how long it lasts.
