Besides lower coal production in China, several other key coal mining centers around the globe have also cut production, hence supporting coal prices. Meanwhile, rising demand for Indonesian coal also stems from Bangladesh and Pakistan where coal is used in the new power plants that supply electricity to meet demand from both countries' thriving textile and footwear industries. However, Hendra Sinadia, Deputy Director at the Indonesian Coal Mining Association (APBI), recently stated that - fundamentally - global demand for coal has not improved yet and therefore it is highly uncertain whether coal prices can maintain the current price momentum in the remainder of the year.

The recently surging coal prices are therefore not expected to lead to rising coal output as many miners are still plagued by debt constraints, while it remains unclear whether the recent price growth can be sustained. More likely, Indonesian coal miners will boost production figures in 2017 provided these price gains hold. Overall, Indonesia is expected to export some 300 million tons of coal in full-year 2016, while forecasts for exports in the following year are at similar levels. Around 75 percent of Indonesia's coal output is exported abroad. Coal output in Southeast Asia's largest economy is estimated to reach 400 million tons in 2016, down from 440 million tons in the preceding year.

Read more: Overview of Indonesia's Coal Mining Sector

Due to the sharp price increase of coal over the past two months, Indonesia's HBA has risen 9.7 percent year-to-date. Meanwhile, Asian benchmark thermal coal prices show an even steeper recovery, having climbed nearly 30 percent since mid-May to around USD $65 per ton.

However, miners that are particularly expected to benefit from the recent coal price surge are those miners that are based in Australia and Colombia. Australian miners, generally, were reluctant to cut production when prices tumbled. Meanwhile, Colombian coal miners enjoy cheap freight rates as well as the expanded Panama Canal and therefore managed to boost coal exports to Asian nations, including Japan and South Korea.

Indonesian Government's Benchmark Thermal Coal Price (HBA):

Month    2012    2013    2014    2015
January   109.29    87.55    81.90    63.84    53.20
February   111.58    88.35    80.44    62.92    50.92
March   112.87    90.09    77.01    67.76    51.62
April   105.61    88.56    74.81    64.48    52.32
May   102.12    85.33    73.60    61.08    51.20
June    96.65    84.87    73.64    59.59    51.87
July    87.56    81.69    72.45    59.16    53.00
August    84.65    76.70    70.29    59.14    58.37
September    86.21    76.89    69.69    58.21
October    86.04    76.61    67.26    57.39
November    81.44    78.13    65.70    54.43
December    81.75    80.31    69.23    53.51

in USD/ton
Source: Ministry of Energy and Mineral Resources