Coal Prices Near Bottom: Is It Time to Hunt These 5 Stocks?

Main Takeaways

JAKARTA, investortrust.id – Global coal prices are expected to remain under pressure through the end of 2025, driven by weak import demand from key buyers such as China and India. However, the price slump appears to be nearing its floor, prompting speculation about whether this is the right time to revisit coal stocks.

BRI Danareksa Sekuritas maintained a Neutral rating on the coal sector in its latest research, while highlighting five key stock picks: PT United Tractors Tbk (UNTR), PT Alamtri Resources Indonesia Tbk (ADRO), PT Adaro Minerals Indonesia Tbk (AADI), PT Indo Tambangraya Megah Tbk (ITMG), and PT Bukit Asam Tbk (PTBA).

Coal Prices Approach Cost Support Levels

The firm noted that coal prices are hovering near global production cost support levels. Indonesia’s benchmark coal indices have fallen short of analysts' expectations. As of year-to-date, the ICI3 index averaged at $64.8 per ton, while ICI4 stood at $47.6 per ton — reflecting annual declines of 15.6% and 15.5%, respectively.

These price drops stem largely from softening demand in China and India. Chinese coal imports dropped 7.9% year-on-year to 189 million tons in the first five months of 2025. Indian imports also fell by 7.2% to 38 million tons in the first quarter. “Both figures came in below analysts’ earlier projections, which expected stable or slightly rising demand,” the report stated.

Domestic Production Rises, Exports Contract

China has increased its domestic coal output by 7% year-on-year, resulting in higher inventory levels at ports and industrial facilities. Meanwhile, Indonesia's coal exports shrank by 8% year-on-year in the first half of 2025, as extreme weather disrupted mining and shipping activities.

Despite the pricing pressure, several Indonesian coal producers are benefiting from reduced royalty obligations under the new IUPK (Special Mining Business Permit) regulation. This has helped push down average cash costs for ICI4-grade coal to $40–45 per ton. Some low-cost producers are reportedly operating at just $35 per ton.

Weak Recovery Outlook, Defensive Picks Stand Out

While further downside risk appears limited, analysts believe any price recovery is unlikely before the end of the third quarter, when the next restocking cycle is expected to begin.

If current price levels persist, BRI Danareksa Sekuritas estimates that coal miners may suffer a 20–25% decline in net profits for the 2025 fiscal year. Sector-wide valuations have fallen to an average of 5.0 times price-to-earnings (PE) ratio — a historically low level.

Nonetheless, risks to earnings remain elevated. UNTR stands out as the most defensive pick, given its exposure to mining services — a segment considered more stable — and an attractive dividend yield of up to 8%, according to the brokerage.