Why China and India are choosing better coal and buying less from Indonesia

China and India, two of the world’s biggest coal buyers, are cutting back on imports from Indonesia, the top global supplier of this fuel for power plants. Instead, they’re picking higher-quality coal from other countries like Australia, Russia, and South Africa. This shift is happening because coal prices have dropped worldwide, making better-grade coal more affordable.

Higher-quality coal burns more efficiently, producing more energy and less waste, which suits the needs of power plants in both nations. In India, power companies are upgrading their plants to handle this premium coal, aiming to boost efficiency and meet rising electricity demands. China, meanwhile, is modernizing its coal plants to cut pollution and improve performance, favoring coal with more energy content.

Indonesia’s coal, while cheaper, often has lower energy value, making it less appealing now. This change is hitting Indonesia hard, as China and India make up nearly half of its coal export market. Indonesia shipped 470 million metric tons of coal last year, but demand from these two countries is expected to drop this year. As a result, Indonesia may face challenges in selling its coal, especially the lower-grade types.

On the other hand, countries like Australia and Russia are seeing more business as their high-quality coal gains popularity. This trend shows how global price changes and the push for cleaner, more efficient energy are reshaping coal trade. While Indonesia struggles, other coal exporters are stepping in to meet the new demands of China and India.