China mine disaster and Indonesia export curbs drive coal prices to 2-year highs

China Mine Disaster and Indonesia Policy Shake-Up Roil Global Coal Market

A deadly explosion at a Chinese coal mine and sweeping new export controls in Indonesia are tightening global coal supplies just as seasonal demand climbs, pushing Asian benchmark prices to their highest levels in more than two years.

Shanxi Disaster Triggers Safety Crackdown

The May 22 gas explosion at the Liushenyu coal mine in Shanxi province — China’s largest coal-producing region — killed at least 82 workers and injured more than 120, making it the country’s deadliest mining accident in over 15 years. President Xi Jinping ordered a full investigation, and regulators responded with sweeping mine closures across the province. As of June 15, 148 mines had been shut since late May, with 51 still inactive, according to UBS. Reuters reported that 109 mines in Shanxi were initially suspended, halting 319,000 metric tons of daily production.reuters

The supply squeeze is already moving prices. UBS estimates the disruption will cut China’s coking coal output by roughly 3 percent this year, or about 15 million tonnes. Metallurgical coal prices have risen approximately 33 percent since March, while thermal coal has gained about 15 percent. Analysts at Galaxy Futures project Shanxi’s output could fall 10 to 15 percent in late May and June.reuters

Indonesia Export Overhaul Adds Uncertainty

Compounding the supply shock, Indonesia — the world’s largest coal exporter — launched a contentious policy requiring all coal, palm oil, and ferroalloy exports to be reported through newly created state firm Danantara Sumberdaya Indonesia starting June 1. President Prabowo Subianto’s surprise announcement in late May caught traders and even senior government officials off guard, triggering weeks of confusion over how the system would work.reuters

Bloomberg reported that Asian Newcastle coal futures hit a two-year high on June 7 as the new rules delayed shipments. While DSI clarified on June 11 that it would not take over existing contracts and would function as a data-driven overseer rather than a trader, regulations published this month state that after December 31, 2026, commodity exports “may only be conducted” through the state entity. The full rollout has since been delayed to January 2027.youtube

Converging Pressures Point to Sustained Tightness

The dual disruptions arrive as broader forces squeeze the market. The U.S.-Israeli military operation against Iran, which began in late February, has kept global LNG prices elevated, bolstering demand for coal as a substitute fuel. Meanwhile, the U.S. National Oceanic and Atmospheric Administration confirmed on June 11 that El Niño conditions are present and expected to strengthen through winter 2026-27, a pattern that historically boosts electricity demand across Asia while disrupting coal mining and logistics in Indonesia and India.thecoalhub

China’s coal imports in January through May fell 3.2 percent year-on-year to 182.6 million metric tons, but analysts expect a sharp reversal as summer heat drives power consumption higher and domestic supply remains constrained. Coal prices on the Newcastle benchmark have risen more than 38 percent year-to-date, and UBS expects thermal coal to hold near current levels through the summer restocking period.proactiveinvestors