China's Coal Imports Collapse: Indonesian Suppliers Bear Brunt of Decline

China's coal imports dropped 26% YoY in June to 33 million tons, with Indonesia bearing the brunt of the decline. The collapse in domestic prices has allowed Chinese power plants to source better-quality supplies more cheaply, and the government is considering export levies on coal, further weakening its attractiveness. Domestic oversupply and regulatory efforts to curb overcapacity may provide some relief, while the outlook for China's steel industry remains uncertain.

China's coal imports have dropped significantly, with a 26% year-on-year (YoY) decline in June 2025, reaching 33 million tons. This substantial reduction, the lowest monthly level in over two years, has been driven by a combination of factors, including the shift towards higher-quality coal and domestic oversupply [2].

Indonesia, China's largest coal supplier, bore the brunt of this decline, with imports from Indonesia falling 30% YoY in June. This drop underscores the trend of Chinese power plants sourcing better-quality supplies more cheaply due to the collapse in domestic prices, which have reached four-year lows. The government's consideration of export levies on coal further weakens the attractiveness of Indonesian coal for Chinese buyers [3].

The decline in Chinese coal imports has significant implications for global markets. Historically, China accounted for one-third of global coal demand, and its retreat has forced producers to diversify or face stranded assets. For instance, Australia and Colombia have benefited from China's preference for high-quality metallurgical coal, with exports rising sharply in 2025 [1].

Domestic oversupply and regulatory efforts to curb overcapacity in China may provide some relief for Indonesian exporters. The government has warned it may shutter coal mines producing above permitted levels, indicating a serious effort to address overcapacity [3].

The outlook for China's steel industry remains uncertain. While margins have improved at mills, government-mandated efforts to shrink steel capacity would ultimately undermine the markets for blast furnace ingredients. Steel demand showed signs of recovery in the first half of 2025, rising 4.3% from a year earlier, but the long-term trajectory is unclear [3].

In conclusion, China's declining coal imports mark a significant shift in global energy markets. Producers and traders must adapt to this new reality, with investors focusing on renewable energy infrastructure, grid modernization, and carbon capture and storage technologies. The winners will be those who align with the direction of energy history, while the losers will be those clinging to thermal coal's fading relevance.

References:
[1] https://www.ainvest.com/news/china-declining-coal-imports-implications-global-thermal-coal-markets-2507/
[2] https://www.tradingview.com/news/reuters.com,2025:newsml_L1N3TH02D:0-china-s-coal-imports-from-indonesia-sink-30-in-june/
[3] https://www.bloomberg.com/news/articles/2025-07-23/china-shuns-low-grade-coal-from-indonesia-as-imports-collapse