Global thermal coal supply falls as Indonesia suspends exports

The Indonesian government's surprise decision to halt some thermal coal shipments in order to ensure domestic supplies could have ramifications for Australian miners locked out of the Chinese market.

Indonesia is the world's largest exporter of thermal coal, accounting for up to 40% of global thermal coal freight and exporting 400 million tonnes in 2020.

However, mine operators are required by law to prioritise the state-owned domestic power generation at below-market pricing of roughly $US70 per tonne, significantly below the $174 per tonne Newcastle coal futures for January.

Indonesia has halted coal exports for the month of January, affecting up to 30 million tonnes of coal, citing low supply levels at power plants that could result in blackouts.

The flow-on impacts are most likely to be felt in China, India, Japan, and South Korea, the archipelago nation's primary commercial partners.

While the decision surprised the market, MineLife senior research analyst Gavin Wendt said it should not come as a surprise because it echoed Jakarta's economic nationalist objective.

"They have been a government that's been very proactive at implementing legislation to protect Indonesian interests," he said.

"We've seen this before, in recent years, with the government regulating and effectively prohibiting raw material exports."

"They don't want to just be an upstream supplier of raw commodities for export; they want to add value."