MediumVI Energy Politics & Supply Security16 October 2026, Friday
Quota uncertainty stalls Indonesia's 2027 coal contracts
Indonesian coal producers and Asian buyers are delaying the signing of 2027 term contracts, Platts reported on 16 October. The market expects the country's 2026 output to fall from about 790 million tonnes in 2025 to 720–730 million tonnes.
According to the Platts report published in Hellenic Shipping News, the uncertainty has two sources. One is RKAB, the annual production quota approved by the state; the other is a new export regime starting on 1 January 2027. Under it, the state company PT Danantara Sumberdaya Indonesia (DSI) will oversee exports of strategic commodities, coal included. The 2027 quota application window runs from 1 October to 15 November, so miners do not know their approved volumes while negotiating. Some miners are adding clauses that tie supply commitments to RKAB and to DMO, the requirement to reserve part of output for the domestic market.
Prices reflect the squeeze. According to Platts, FOB Kalimantan 4,200 kcal/kg coal rose from about 45 dollars in January to 78.55 dollars a tonne on 14 October. FOB Newcastle 5,500 kcal/kg coal climbed from 71.50 dollars on 2 January to 111.75 dollars. Richards Bay 5,500 kcal/kg coal reached 112.05 dollars, its highest since October 2023. IndexBox reported that a major Asian buyer will rely on the spot market until at least the first quarter of 2027. The buyer said the market could stay tight in 2027 too if approved output remains at 2026 levels. The World Bank's Australian coal benchmark rose 8.8% from August to 147.10 dollars a tonne in September.
Talay assessment
Bottom line
Indonesia is tying coal supply to a state quota and a new layer of state oversight. For an Asia already facing an LNG shortage, that means the substitute fuel is tightening too. Output falling from 790 million tonnes to 720–730 million tonnes and Newcastle rising to 111.75 dollars show the constraint is feeding into prices. The most likely path is that contracts stay delayed until quotas are approved and spot prices remain high.
Likely effects
- Asian energy supplyNegative1–6 months
With Gulf LNG constrained, supply of coal as the substitute fuel is also contracting; price volatility rises as buyers lean on the spot market.
- Coal pricesNegative1–6 months
The marked rise in Newcastle and Richards Bay since the start of the year points to a high price band persisting until 2027 quota approvals become clear.
- TürkiyeNegative1–6 months
Türkiye, which burns imported coal in thermal power plants, will feel the rise in seaborne coal prices in its electricity generation costs.
Possibilities, ranked
- 1Contracts delayed, prices stay high60%
Miners turn to conditional contracts until quotas are approved, and buyers cover the first quarter on the spot market.
Watch: The 2027 RKAB application window closing on 15 November and subsequent approval announcements
- 2Quotas tightened further25%
The government denies 2027 quotas to companies that miss their domestic market obligation, and export supply contracts further.
Watch: The RKAB approval list from Indonesia's Energy Ministry
- 3Quotas expand15%
The government raises the 2027 production quota, the DSI regime runs without disrupting commercial ties, and prices ease.
Watch: Platts' weekly FOB Kalimantan 4,200 kcal assessment
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- Indonesia 2026 output forecast▼ 720–730 mn t
- FOB Newcastle (14 October)▲ $111.75/t