Coal Hover Near 3-Month Low

Thermal coal futures from Australia fell to below $130 per tonne in July, not far from their lowest level since early March, as muted purchases from India offset a broader-based rebound for energy commodities. A weak rupee and an upgrade to the quantity of domestic production drove Indian utilities to extend its effort of reducing import dependency. This was combined with elevated levels of domestic inventories for the second-largest consumer to take in lower imports and soften bidding competition from other consumers. Still, energy commodities remained higher since March as fresh escalation between the US and Iran triggered another increase in power prices. LNG tankers held off from crossing the Strait of Hormuz after a vessel was struck by Iran. This supported the outlook that Japan and Korea, the main consumers of higher coal grades from Australia, are likely to maintain coal imports amid higher LNG prices.

Thermal coal futures fell below $130 per ton, returning to levels last seen before the Middle East conflict erupted as continued peace talks between the US and Iran raised hopes for a lasting resolution and the full reopening of the Strait of Hormuz. Investors are closely watching the latest developments in negotiations between Washington and Tehran in Qatar following a recent flare-up in hostilities around the key shipping route. Oil and natural gas prices have also retreated to pre-war levels, with analysts forecasting a global supply surplus as Middle Eastern production rebounds, reducing the need for fuel switching. Meanwhile, China’s latest five-year plan reaffirmed its "all-of-the-above" energy strategy by expanding both coal-fired power generation and renewable energy. China remains the world’s largest investor in clean energy while continuing to lead global coal expansion, accounting for 78% of new coal power capacity added worldwide in 2025.

Thermal coal futures fell below $130 per ton, extending their retreat from near three-year highs after the US and Iran signed an interim peace agreement that paves the way for the reopening of the crucial Strait of Hormuz. The development pushed energy prices lower and reduced incentives for fuel switching. The agreement also includes the lifting of sanctions on Iranian oil exports, while negotiations on nuclear issues and potential additional economic incentives for Iran will follow. The prolonged disruption had previously driven energy importers across Asia and Europe to seek alternatives to Persian Gulf natural gas, with Japan and South Korea notably increasing coal consumption during the conflict. Meanwhile, coal prices had surged to multi-year highs earlier this month after Indonesia tightened export controls on key commodities, a move expected to delay shipments from the world’s largest coal exporter.