TRENDS IN THE USE OF INDONESIAN COAL IN 2026

In 2026, several important trends are shaping how Indonesian coal is used both domestically and internationally:

🔹 Production Adjustments and Market Response

Indonesia plans to reduce overall coal production in 2026 compared to 2025, aiming to stabilize global coal prices amid weaker demand from major importers and oversupply concerns. Production targets may fall below 700 million tonnes as policymakers balance supply with market conditions.

🔹 Shift toward Domestic Use

With export volumes forecast to decline, Indonesia is focusing more on meeting Domestic Market Obligation (DMO) requirements, supplying coal for electricity generation and key industrial sectors such as cement, fertilizer, and smelters. Discussions include potentially raising the DMO share to maintain domestic supply under lower production levels.

🔹 Export Dynamics Under Pressure

Exports have been trending downward, with significant reductions reported in 2025 and expectations of further drops in 2026. This is driven by slowing overseas demand—as some major importers increase their own domestic production and shift toward renewable energy—and by Indonesia’s regulatory moves to restrict exports to support price stabilization.

🔹 Global Demand and Transition Forces

While some Southeast Asian markets continue to rely on coal for power and industrial use, global energy transitions to cleaner sources are slowing overall thermal coal import growth. Long-term structural pressures from renewables and emissions targets are expected to influence Indonesian coal usage patterns.

🔹 Price and Quality Considerations

Reduced spot exports and tighter supply may lead to higher prices for certain grades of Indonesian coal in 2026. Meanwhile, quality consistency and competitive pricing will remain key factors in how industrial users (e.g., power plants, cement and manufacturing sectors) choose between available coal types.