Vietnam is reviewing coal supply security ahead of the dry season as availability of seaborne cargoes from Indonesia remains tight and the US-Israel war with Iran exacerbates volatility in international coal markets.
Officials at coal, power and coal trading companies in Vietnam told Argus that discussions are under way to assess summer power and coal demand with projections of a sharp increase in temperatures across the country. Vietnam relies heavily on imports, as seaborne receipts meet more than half of its coal requirement.
The concerns in Vietnam reflect a broader trend in Asia with the World Meteorological Organisation pencilling in a potential El Nino event during this summer, which could lead to higher global temperatures and a sharp increase in power demand. India is already making preparations to ensure stable power supply to meet peak demand.
The review in Vietnam comes at a time when there is lack of clarity over the production and supply outlook from Indonesia, a key source of seaborne coal for Vietnam. This is also pushing Hanoi to consider diversifying sources and exploring markets such as the US, while also looking at possibilities of raising purchases from Laos, officials said.
But higher freight rates following the Middle East conflict are weighing on plans to seek coal from far-off origins. The conflict and disruptions to the LNG supply chain has also potentially raised competition for Vietnamese utilities in procuring mid-to-high calorific value (CV) coal, with some countries looking to boost coal stocks to support an expected increase in coal-fired generation and decline in natural gas-powered generation.
Mid-CV coal is typically preferred by Vietnamese utilities with coal-fired generation, accounting for the bulk of the country's total power supplies, although some plants buy higher-CV coal from countries including Indonesia and Australia. Hydropower output could decline during the dry season, aggravating coal burn and fuel demand at utilities to meet power demand.
Fuel security is more important for Vietnamese utilities as escalations in costs are generally a pass-through in power tariffs, an official with a generating company said. But authorities closely monitor power tariffs to ensure power is affordable, and any sharp increase in electricity prices because of higher cost of generation could lead to partial or full shutdown of a power plant.
"So, the situation is very complicated," the official added. State-owned coal producer and importer Vietnam National Coal and Mineral Industries (Vinacomin) is also cautiously evaluating its seaborne purchase plans for supplying blended domestic and imported coal to utilities and other end users in the volatile market.
Domestic stocks, imports
Vinacomin and power utilities have stable coal stocks following a year of strong hydropower generation and broadly steady imports and domestic output, giving some cushion to authorities to plan coal sourcing ahead of the dry season.
The imports have also been supported in recent years by regular utility tenders and seaborne coal purchases by Vinacomin from origins such as Australia, South Africa and Laos for blended supplies to a number of utilities to meet specific technical requirements of boilers. Vinacomin has also signed an agreement with state-owned utility EVN this year to supply Indonesian coal to state-owned plants that run on imported coal until 2047 as part of plans to centralise fuel procurement. State-owned producer Dong Bac would also import coal to supply to utilities.
The demand for imported coal as well as electricity is expected to rise in line with Vietnam's plans to grow its economy by over 10pc this year and expand its overall energy-intensive manufacturing capabilities. The increase in imports in the coming years would be led by utility demand and purchases by Vinacomin as well as Dong Bac, and expansion in industrial coal consumption. Vinacomin's imports could rise to 13mn t in 2026 and 17mn t in 2027 from around 10mn t in 2025, another official said.
But traders said the pace of import growth could vary depending on factors such as hydropower and renewable power output, availability from key exporting countries and international coal prices. Vietnam's demand for seaborne coal declines when international coal prices rise, while it emerges as a key buyer in a weak price environment.
Vietnam imported a record 65.43mn t of coal in 2025, surpassing the previous high recorded in 2024, according to preliminary customs data. The widely used Indonesian GAR 4,200 kcal/kg coal was assessed by Argus for Supramax vessels at an average price of $45.17/t in 2025, down by about 15.6pc from a year earlier. Indonesia was one of the largest suppliers of seaborne coal to Vietnam.
